Plum to launch new “Interest” product for UK and EU customers
Smart money app Plum is planning to launch a new “Interest” offering in the third quarter of 2023, so customers can benefit more quickly and directly from rising central bank rates.
Plum customers in the UK and EU will be able to hold their money in government-backed assets that more closely reflect the respective interest rates offered by the Bank of England and European Central Bank. The return from this “Plum Interest” product is expected to be significantly above the highest rates available on easy access savings accounts.
Similarly to traditional savings accounts, money held within this pocket will be easily accessible to customers. All monies will also be subject to regulatory safeguarding rules, which means they will be secured in a separate, segregated account.
This “Plum Interest” product is based on a type of highly liquid money market fund that invests fully in short-term assets issued and guaranteed by the Government. That makes this type of money market fund particularly stable. As recent history has shown, governments are also the ultimate backstop for banks and other financial services, underlining the security of this new offering.
Victor Trokoudes, Founder and CEO of Plum, who announced the new feature at the Money 20/20 conference today, said:
“Enough is enough. At Plum, we’re going to provide our customers with an account that generates interest at a level much closer to the BoE and ECB base rates. Our product will allow people to put their money directly to work with the Government via a money market fund rather than see their return diluted by a banking intermediary. People have worked hard for their money so their money should work harder for them, and we’re committed at Plum to make their money motivated.”
The popularity of money market funds has surged among consumers, especially in the US following recent turmoil in the banking sector. Money market funds have been traditionally used by pension funds and wealthy individuals as a safer place to park their money and earn a higher return, while also being able to access their money more quickly thanks to these funds’ higher liquidity.
Victor Trokoudes added:
“The recent growth in popularity of money market funds show they’re an increasingly mainstream option for people to hold their money. That’s because more people are recognising the added safety that comes with assets fully guaranteed by governments, irrespective of how much money you hold.
“With our “Plum Interest” product, you won’t have to worry about constantly switching banks to get a higher rate as the product tracks changes in the central bank base rate. We’ll be bringing this revolutionary cash management option to our 1.6 million customers so they can diversify where they hold their cash”.
The “Plum Interest” product is expected to be offered in the European markets where the Plum app is available.