Lightyear launches ‘Vaults’: Highest available rate in the UK of all flexible interest-earning products with no strings attached

Today, wealth platform Lightyear announces the launch of its high interest Vaults. These will pay UK savers 5.19% AER –  the highest rate currently available out of all flexible interest-earning products with no strings attached in the UK¹.

The Bank of England held the base rate at 5.25% on the 9th May; meanwhile data released on the 30th April shows that 65% of UK deposits – £1.16tn – is sitting in easy-access savings account with an average rate of 2.12%^2. Separate data put ‘a rainy day fund’ as the top reason for saving in the UK³, making it clear people want money readily available, rather than locked away for fixed term periods.

How Lightyear’s high interest Vaults work

Lightyear’s easy access, flexible and high interest product to help Brits make the most of the 16-year high base rate across three major currencies, paying 3.83% in EUR, 5.38% in USD and 5.19% in GBP. All three currencies will be the highest available interest yield for users on the platform, giving overnight interest that accrues daily and pays out monthly.

The high interest Vaults enable customers to benefit from an even higher interest rate than offers for uninvested cash. It does this by providing access to AAA-rated money market funds by BlackRock –  the world’s largest asset manager by AUM (over $10 trillion).

These are cash-equivalent investments, meaning customers see some of the benefits of keeping money as cash (low risk and high liquidity), but get a yield from investing into these collections of government bonds, fixed term deposits and instruments that track the base rate. This asset class has traditionally been reserved for those with over £1 million to invest⁴.

Customers will be able to instantly access money from their Vaults, with same day transfers back to their cash wallet on Lightyear, and withdrawals to external accounts either same or next day.

Lightyear’s Vaults compared to the broader market

 ightyear’s Vaults pay out a current rate of 5.19% AER – the highest rate customers can get out of all flexible interest-earning products that have no account opening or min/max amount criteria, as of 26.04.24¹. The rate is variable and subject to change; all numbers shown are net of fees (the actual amount customers on Lightyear will receive)⁵.

Interest-earning products on the market often lock in rates and add a plethora of service fees on top, ultimately reducing the value that’s passed back to the customer. Lightyear’s Vaults have a simple and flat 0.25% fee; of which 0.1% is a BlackRock fee and 0.15% is a Lightyear fee.

The ability to hold major currencies and be earning a yield on GBP, USD and EUR means the modern investor – someone traditionally holding mixtures of global instruments including local UK stocks alongside US and European stocks – can make the most of their money without constant foreign exchange fees, as Lightyear’s multi-currency accounts supports holding and investing in all three.

Martin Sokk, Co-founder and CEO at Lightyear, says: “Our new high interest Vaults will help people across the UK make the most out of globally high interest rates. It’s not in our nature to do things by halves, so we’re offering the highest rate on the market out of flexible interest-earning products. We’re able to do that because we’re giving customers access to a cash-based investment product that’s usually been reserved for high net worth individuals. Cash has become an asset class in its own right recently, forming proportions of people’s investment portfolios, so it’s been increasingly important to us that we build something customers really want – with the same transparency, low fees and quality of the rest of the platform. We’re so excited to bring Vaults to the market, offering the flexibility and easy access that people want, with a product that tracks the overnight interest rate.”

Lightyear’s Vaults will be live across major European markets including Austria, Estonia, Finland, France, Germany, Hungary, Italy, Luxembourg, Netherlands and Spain, alongside the UK.

Footnotes

1) Lightyear’s High Interest Vaults provide the highest rate available out of all interest-earning products that have no account opening criteria or min/ max amounts, based on Lightyear’s analysis on 26.04.24. This is a range of different types of interest-earning products selected according to their similar levels of flexibility to Vaults (see full table). Note these are a mixture of financial products with differing risk levels and protections. Please note Lightyear is not a bank, and does not offer an ISA. Money market funds do not have deposit protection insured by the FSCS; it is an investment product with different protections for assets (see here).

2) £1.16 trillion – 66% of all deposits – sits in these accounts and earns less than this average: 30th April Bank of England Money & Credit – march 24 report from Bankstat tables (Tables A6.1)

Workings out

2. Average rate on sight accounts is 2.12%: 30th April Bank of England Money & Credit – march 24 report from Bankstat tables (Tables G1.4)

3)  The top reason for saving in the UK is for a rainy day (57%: Money & Pensions Service Nation of Savers: UK Adult Financial Wellbeing Survey report

4) BofE Sterling money market funds Report /  Money Market Funds: What They Are, How They Work, Pros and Cons

5) A flat 0.25% is taken off the daily gross rate of the MMF; a 0.15% Lightyear fee plus a 0.10% BlackRock fee). This rate reflects the 1-day yield: the average rate of return of this fund over the prior day, if held for one year. This is an investment product, so as with any investment, your capital is at risk and you should seek professional advice if unsure. Key Information Documents rate each offered MMF with a Risk and Reward Profile rating of 1/7, available on Lightyear and BlackRock’s websites. Rates are subject to fluctuate and change.

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