Plum launches ‘Plum Interest’ to increase returns on cash

Smart money app Plum is launching a new interest product to help customers directly benefit from higher central bank rates.

Customers in the UK, France, Spain, Italy, Ireland and the Netherlands can now hold their money in government-backed assets closely reflecting the respective interest rates central banks offer.

With similar benefits to a savings account — minus the withdrawal and deposit restrictions enforced on some high-interest products — the product aims to decrease the amount of money sitting idle in customers’ bank accounts when it could be earning interest, combining higher rates with daily returns.

“It’s time to shake up the industry and offer an alternative for cash holdings,” Plum founder and CEO Victor Trokoudes said.

“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.”

Based on a money market fund, the current variable annual rate is 4.94 per cent for UK customers and 3.6 per cent for EU customers.

Plum has partnered with BlackRock on the new product, and the asset management firm will provide the money market fund that supports it.

“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,” Trokoudes added.

“We’re bringing this revolutionary cash management option to our customers so they can diversify where they hold their money”. 

Money market funds are mutual funds investing in highly liquid, near-term instruments and are generally considered to be very low-risk.

They are traditionally used by pension funds, large corporations and wealthy individuals to temporarily park their money and safeguard it from inflation while retaining the option to access it quickly.