Octopus Investments Reading time: 5 mins

Octopus aims to take the stress out of saving with one-year rate tracker

18 May 2017

Research by Octopus shows failure to switch accounts could be costing households nearly £1,000 over five years

  • Octopus has teamed up with some of the leading challenger banks to create a service that aims to ensure time-poor savers earn a good rate
  • ‘Octopus Cash’, currently offered as a one-year fixed-term account, gives a rate that’s more than double the ‘high street’ average (accurate as of May 2017)*
  • Savers are automatically offered the product’s best rate at the end of the term, aiming to remove the need to regularly switch

Fixed-term savers looking to deposit £1,000 or more can now repeatedly earn a top-tier rate without the hassle of frequently opening new accounts, thanks to Octopus Cash – the latest product from Octopus Investments.

Octopus has teamed up with a number of challenger banks — including Cambridge & Counties and OakNorth Bank — to build a service that aims to automatically give savers a top-tier rate, year-in, year-out.**

Savers with Octopus Cash can currently look to earn to 1.27 per cent: more than twice the ‘high street’ average of 0.53 per cent. (Accurate as of May 2017)*  At the end of the term, they will have the option of automatically rolling over onto the best new rate on offer from the product’s banking roster, without having to open a new account – helping to avoid the hassle of moving accounts if a single bank changes its rate.

A 2015 FCA study found that, together, UK savers hold £145bn in fixed-term deposits, but fewer than one in ten choose to move it at the end of the term*** – a fact which research conducted by Octopus in May 2017 shows could be costing households hundreds of pounds each year.

Someone depositing £25,000 with Octopus Cash could be £184 better off after the first year. But by leaving their money in their account, as they might anyway otherwise be inclined to do, that figure could potentially rise to nearly £1,000 five years later.                                                                                                                     

Below: Shortfall in interest earned through the average ‘high street’ one- year savings account, compared to Octopus Cash.


Deposit £5,000 £10,000 £25,000 £50,000 £85,000 £100,000 £150,000 £250,000
Gap after 1 year £36.83 £73.67 £184.17 £368.33 £626.17 £709.84 £994.67 £1,491.67
Gap after 2 years £74.33 £148.60 £371.65 £743.31 £1263.63 £1,432.28 £2,006.56 £3,008.14
Gap after 3 years £112.50 £225.00 £562.51 £1,125.02 £1,912.50 £2,167.52 £3,035.88 £4,549.76
Gap after 4 years £151.36 £302.71 £756.78 £1,513.57 £2,573.06 £2,915.72 £4,082.87 £6,116.83
Gap after 5 years £190.90 £381.81 £954.52 £1,909.04 £3,245.37 £3,677.07 £5,147.79 £7,709.69


We calculated the amount of interest that would be earned through Octopus Cash on a variety of cash balances (at a rate of between 1.13 per cent and 1.27 per cent, depending on the size of the deposit), and subtracted the amount that would otherwise be earned through a blended average of the ‘high street’ one-year savings rates: currently 0.53 per cent. (Accurate as of May 2017).

‘High street’ defined as the ‘Big Five’ banks: RBS (including NatWest); Santander; Barclays; HSBC (including First Direct) and Lloyds – though Lloyds currently doesn’t offer a one-year account. This average includes rates for premier customers and those with larger balances. We have assumed that interest is compounded each year, and that neither set of rates change, to produce projections over a two, three, four and five-year time horizon.

A 2015 FCA study found that the majority of fixed-term accounts have balances of between £10,000 and £25,000.***

Sam Handfield-Jones of Octopus said:

“Many savers could be throwing away hundreds of pounds each year, simply because switching could be seen as too much of a hassle. And it’s not hard to see why: with banks regularly changing their interest rates, keeping on top of the best-buy tables – not to mention opening new accounts every year – is, we think, enough to put anyone off.

“We’ve designed Octopus Cash as a way to take the stress out of finding – and staying on – a good rate. By creating one account with us, savers can rest easy, knowing that we’ll be giving them the best rate possible from among our partner banks. It’s one less thing to worry about.”

Rachel Curtis, Chief Customer Officer of Cambridge & Counties, added:

“Octopus Cash is a smart way for savers get their money working harder, with minimal effort. While we like to think our own application process is quick and simple, we understand the pain for customers of opening multiple bank accounts, and know that many never quite get round to doing it. We’re thrilled to be working with Octopus to help savers find better rates more easily, with maximum FSCS protection.”

Joel Perlman, Founder of OakNorth Bank, said:

“With inflation on the rise and interest rates stuck at all-time lows, savers need better solutions. This is a great opportunity for banks like ours to offer savings products to a broad range of savers who will undoubtedly benefit from Octopus Cash’s offering, which includes better rates than the high street, FSCS protection, and reduced hassle.”

As well as hoping to help savers who don’t have the time – or the inclination – to browse the best buy tables each year, the product also aims to help those with larger balances, who want to try and ensure more of their money remains protected by the Financial Services Compensation Scheme (FSCS).

Because Octopus will spread deposits of more than £85,000 across multiple banks, savers can benefit from up to £255,000 of FSCS cover in one single Octopus Cash account – provided they don’t already have positive account balances with any of its partner banks. They can choose to save even more if they wish, but the extra funds won’t be covered by the scheme.


Notes to Editors

*‘High street’ defined as the ‘Big Five’ banks: RBS (including NatWest); Santander; Barclays; HSBC (including First Direct) and Lloyds. 0.53 per cent is the averaged out one-year savings rate paid by these banks (including rates for premier customers and those with larger balances) in May 2017.

**Across all savings balances, Octopus Cash offers a rate that is within 30% of the market leader – currently Charter Savings Bank, offering 1.55% on a one-year term (accurate as of May 2017).

***Financial Conduct Authority (FCA), ‘Cash Savings Market Study Report’ (2015)

All Octopus Cash partner banks are fully regulated by the FCA and Prudential Regulation Authority (PRA), and are protected by the FSCS.

For journalists in their professional capacity only. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest.

Commissioned by Octopus Cash, a trading name of Octopus Institutional Deposits Limited (Company Number 10163532). Issued by Octopus Investments, which is authorised and regulated by the Financial Conduct Authority (No. 03942880). Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales.

All information in this document is correct at 17 May 2017 and is sourced from Octopus data unless otherwise stated. We may record telephone calls to help improve our customer service.