I don’t think one could offer a saving product when it’s not a bank yet?
They know they have a high value product
I’m not sure if it’s high value. They are just offering an interest rate which is 5-6 times the normal interest rate for the one-year maturity with the only goal of attracting customers. They are simply burning money.
This does not make sense in finance. It’s going to generate big misunderstandings in lots of folks.
Yep, I vaguely remember reading something like that on the dozens forum… but I can’t find it now lol
Yet they say that:
Separately your cash savings (excluding any bonds) of up to £85,000 held in the Save section of the app are covered by the Financial Services Compensation Scheme (FSCS)
I recall AC (the founder) in one of his videos saying that this savings will earn a very small amount of interest - my thinking would be why not just offer the 5%?
Well done on reading terms and conditions… I was looking for them but couldn’t find it as you said
Those savings currently do not earn interest. The bonds are currently the only interest generating product available.
The non-bond savings are currently held at Bank of Scotland/Lloyds and therefore receive their FSCS protection.
Yes FSCS protection on cash saving is from their partner bank who will hold the money but not from Dozen @Nsteer is correct
I don’t think Dozens could offer their own saving product yet.
I’m amazed by the 5% rate. Marcus took in heaps of cash with a 1.5% rate. Would have been just as successful to get the bank savings license and offer 2% or even 3%.
Chip can do it up to 5% it must be possible with no bonds.
But with Chip don’t you need to refer a load of people?
I just had a quick look at the #AskAC video where he talks about the cash savings account and “not offering a huge amount of interest on that product” (3:49 in the video) implying that some interest would be offered - if all that dozens is doing with the bond is adding 5% of the capital and putting it in a trustee account, I don’t see why they cant add that 5% to the savings account (I am obviously not a financial law expert )
You’re missing the point. 5% can still be done without a bond, regardless of how it happens. Chip is in a not too dissimilar position to Dozens license-wise.
There are better ways to offer a market leading 5% then the way Dozens does it.
Anyone figured out the tax challenge yet and if large amounts will need to do SA?
If you’re not holding it in a S&S ISA then the 5% coupon would be considered income and you would have to pay tax at your marginal rate (so no benefit from PSA). It will need to be declared as coupons are normally paid gross.
I assumed as much, that’s what I can’t back it and swiftly opted out.
A noble idea, poorly executed for those that already have an S&S ISA (and a largely unused PSA!).
A 5% return could swiftly be wiped out by an incorrect tax return, a HMRC fine or hiring an accountant to make sure neither of these happen.
Its not as bad as that, I do self assessment anyway but if you didn’t as long as the interest amount was less than £2500 (which it is highly likely to be) you can call HMRC up and pay it over the phone or arrange for an adjustment to your tax code without completing SA.
the chip way is badger your friends, this seemed like a good option although having just read through the posts surrounding tax I’m not so sure…(I just read a website article about tax of bonds and coupons) and now I’m very much more aware of the issues surrounding the bonds and the complexities and muddy water surround it
That’s what I meant.
I completely agree, Chips way of getting the 5% is crap. It’s a fintech Ponzi scheme but with your mates rather then money. However, for me it only serves to prove that 5% is possible, without a call to the tax office.
I just wish Dozens had baked this cake a little longer in the oven before release, because when you boil it down to the actual pounds in your pocket you’ll make from the 5% (considering the bidding process and how much you’ll take actually get into the scheme), it isn’t worth messing around with SA or the tax man. (For me anyway!).
I’ve had a fine before for missing a declaration on my SA. I’m extra wary of these things now.
I also am no expert I found the posts I vaguely remembered where interest on cash savings was (very briefly) discussed.
Rob included this in one of his posts.
Which was followed up by this question
And this answer was given
Ah, also found this one a little further down that thread
Chip’s interest thus far is from their marketing budget. Presumably not sustainable.