In line with plans unveiled earlier this year, smart money app Plum has launched a new ‘Plum Interest’ product, allowing customers to benefit more quickly and directly from higher central bank rates.

Plum customers in the UK and five EU markets – France, Spain, Italy, Netherlands and Ireland – are now able to hold their money in government-backed assets that closely reflect the respective interest rates offered by central banks. Plum is the first company to offer this type of product both in the UK and multiple EU markets.

Plum Interest is designed to offer a compelling location for people to hold their money rather than remaining dormant in a low-interest account, as it combines higher rates with daily returns. Currently, the variable annual rate is:

• 4.94% for UK customers
• 3.60% for EU customers

The product offers similar benefits to a savings account, without the withdrawal and deposit restrictions associated with some high-interest products. Money held in Plum Interest will be easily accessible and there are no transaction costs for moving money into and out of accounts. There is also no minimum or maximum deposit, and no subscription fees. All monies are also subject to regulatory safeguarding rules, which means they will be secured in a separate, segregated account.

Victor Trokoudes, Founder and CEO of Plum, said:

“Many high street banks have been failing their customers on interest rates, leaving hard-earned money sitting idle and eroded by inflation. For example, just 8% of the rises in the ECB rate had been passed onto customers in Spain, which is unacceptable. Meanwhile, larger banks are happy to ramp up the cost of lending when everyone’s finances are under immense pressure.

“It’s time to shake up the industry and offer an alternative for cash holdings. People don’t have to accept the same old from traditional banks that don’t have their best interests at heart. At Plum, we’re going to provide our customers with an account that generates returns close to central bank rates. And they won’t have to face the typical withdrawal or deposit restrictions that are often included with high-interest savings accounts. People have worked hard for their money so their money should work harder for them, and we’re committed at Plum to supporting this with the best options out there”.

Plum has partnered with BlackRock which is providing the money market fund that supports Plum Interest. The product is based on a type of highly liquid money market fund. It invests fully in short-term assets issued and guaranteed by the Government.

Victor Trokoudes added:

“Money market funds shouldn’t be just the preserve of the few who can afford to access them, so we’re making it easier for people to benefit from them. They’re already a mainstream option for people to park their money and avoid low savings rates in the US. That’s because more people are recognising the added safety that comes with assets fully guaranteed by governments.

“With our Plum Interest product, you won’t have to worry about constantly switching banks to get a higher rate as the product tends to track changes in the central bank base rate. We’re bringing this revolutionary cash management option to our customers so they can diversify where they hold their money”.