Can a cash management platform actually save you money?

Savings accounts have been part of banking ever since there’s been banking, but what should you do if you’re looking to take your savings a bit more seriously? This is where cash management platforms come in: allowing you to save larger amounts of money than you would in a standard ISA while also enjoying the benefits of interest rates and investment opportunities.

Here, we’ll take you through if cash management platforms are worth it and whether you can actually save money by using one.

• How do cash management platforms work?
• Cash management platforms pros and cons
• How much should you be saving?
• Is a cash management platform worth it?

How do cash management platforms work?

Cash management platforms are essentially websites that work with banks and building societies to find a savings account that works for your personal financial situation. This means that cash management platforms act as comparison sites that can do the hard work for you when it comes to shopping around for a savings account.

Cash management platforms often work as “hub accounts”, which store your money for you in between being deposited into a full savings account. The accounts you sign up to will generally have a fixed term, and once that term is over, your money will automatically be moved into the hub account, where it can be deposited somewhere else.

It’s important to remember that the platforms themselves aren’t banks, and your money won’t accrue interest when it’s between savings accounts.

Cash management platforms pros and cons

As with other types of financial services, cash management platforms offer various benefits and pose risks, so it’s important to be aware of these before you sign up.

Pros

• You’ll avoid getting a standard variable interest rate
• You don’t need to spend time manually finding your own account
• You can save more money than you would in a standard ISA or savings account

Cons

• Depending on your account, you might not be covered by the Financial Services Compensation Scheme. Make sure your provider does before signing up
• Higher minimum deposits compared to other available savings accounts
• There might be better interest rates available if you go direct

How much should you be saving?

How much you earn by using a cash management platform will depend on a few factors. Obviously, the more you deposit, the more you’ll save and the more interest you’ll accrue over your fixed term.

If you’re looking to make the maximum amount of money, a cash management platform can help you with this by showing you the best rates available to you, though as previously mentioned, you might find better rates by doing your own research.

These platforms tend to work with specialist banks (sometimes known as challenger banks) that offer higher rates than high street banks in order to stay competitive. These are the accounts you’ll want to look out for – ones where you can make your money work for you in a way you wouldn’t if you just opened an account with Barclays (for example).

Is a cash management platform worth it?

Since everyone’s situation is different, whether a cash management platform is worth it will depend on your personal situation. Before you commit to one platform or another, it’s best to analyse your financial situation and what you’re looking to get out of using the service.

For example, if you have a lot of savings and need something to do with them, cash management platforms can give you a level of flexibility and options that you might not be able to get with high street banks. But if you’re only just beginning to save or require a lot of cash flow in your day to day life, the commitment may not be worth it.

However, if you’ve decided that a cash management platform is something you think could benefit you, why not check out our online cash management tool to see how much you could save?