Tally Money: Is His 2% Gold “Savings” Account Safe?

A new product aimed at savers and backed by gold was launched with a rate of 2% over one year.

The account, open to those who deposit between £ 1,000 and £ 20,000, was started by e-money provider Tally Money.

Rather than relying on fiat money, Tally Money uses gold as a physical reserve and claims that unlike traditional banks, its clients’ savings are never loaned, tapped, or invested, meaning it there is no risk of bank loan for customers.

However, it does not come with the protection of the financial services compensation scheme and one expert has warned those who would be tempted to be wary of the offer.

London-based Tally says the money saved with her is pegged to the value of gold.

Cameron Parry, CEO and Founder of Tally, said: “When it comes to savers, the current banking system is designed to protect and benefit the bank, not the customer. People need an alternative, which is why we built Tally.

“With inflation far exceeding the low rates offered by the big banks, people are desperately looking for solutions that offer value, security and an alternative to this fiat money trap (issued by the government).”

He adds, “This product, and the Tally banking system in general, was designed to give savers a chance to fight rapidly rising inflation and financial volatility.

“And unlike traditional banks, our clients’ deposits are not loaned, increased or invested, which makes saving with us more secure. ”

How it works?

The new savings product is available through the Tally app for Tally customers only.

Those interested will need to download the Tally app and complete its onboarding process to open a daily account, for which a membership fee of £ 20 is charged.

There is also a 1 percent annual account fee for money held in Tally’s checking account – although this does not apply to money held in the “savings” account.

When you transfer money to your Tally Money account, these funds are used to purchase gold at the global wholesale price.

The gold is then denominated in “Tally” with each “Tally” valued at one milligram of physical gold, so you can save it and spend it using your Tally app and Tally Debit. MasterCard.

As the price of gold goes up and down against the British pound, the value of your Tally account and the price of gold may fluctuate.

However, Tally’s fixed rate ‘savings’ offer allows you to withdraw money from your daily Tally account and fix the value and return at 2% for one year, with the balance locked in as soon as your deposit is coming.

This, he claims, means your deposit and return are unaffected by movements in the price of gold.

At the end of your term, your money will automatically be transferred to your Tally account, where you can access the funds and where it will fluctuate again based on the price of gold.

People can deposit between £ 1,000 and £ 20,000 into the fixed rate offer, although places are allocated on a first come, first served basis.

Tally plans to facilitate up to 1,000 savings accounts per month with the exact number depending on the total amount deposited.

Parry said, “Saving money that retains its value over time and keeps client assets safe at all times is fundamental to an individual’s financial well-being.

“Our market-leading one-year fixed rate product makes fixed rate savings more rewarding and also introduces clients to the benefits of Tally’s non-fiat banking system. ”

Is it safe?

Tally Money is an electronic money institution which means you have different protections under UK law.

Like any bank account issued under an electronic money license, Tally accounts are not covered by the Financial Services Compensation Scheme.

The FSCS is an independent statutory body set up to reimburse customers up to a maximum of £ 85,000 – or £ 170,000 in the case of joint accounts – in the event of a bank failure.

Instead, Tally Money protects its clients’ money in gold and fiat currency, which is held at a bank in Switzerland, held on behalf of Tally’s clients under a custodial arrangement, under the protection a security trustee.

Tally claims the combined value of this exceeds the total value of all customer deposits and guaranteed returns.

It also states that while it is not covered by the FSCS, it is also not limited by it, meaning that deposits up to £ 85,000 and above are protected.

However, this does mean that your savings will be tied to the value of gold and hence you will ultimately be relying on the value of gold which will increase over time.

The lack of protection from the FSCS, coupled with the fact that Tally Money is pegged to movements in the price of gold, means one expert says it is treating it more as an investment program than a savings product.

James Blower, Co-Founder of Savings Guru, said: “Gold is a tradable investment and its value can go down as well as up and I would not recommend this investment to anyone.

“I am concerned that the 2% return will not be achieved, especially if the value of gold depreciates over the next 12 months and savers are not protected by the FSCS.

“Unfortunately, we’ve seen too much investment recently, trying to lure savers into investments, which ended badly for savers.”

Meanwhile, Anna Bowes of Savings Champion, warned: “It is misleading to oppose it to savings accounts because it is certainly not the same thing.

“This is an investment and anyone who invests in it should be very clear about the risks.”

How does it stack up?

The actual rate of return will largely depend on how much you are willing to invest.

Taking into account that savers will need to set up a Tally account and pay £ 20 for the privilege, the effective yield on a £ 20,000 deposit drops from 2% to 1.9%.

For a £ 10,000 deposit the effective return becomes 1.8% and for a £ 1,000 deposit the cost of Tally membership essentially negates any form of return.

The market-leading one-year fixed rate offer offered by SmartSave Bank currently pays 1.38%.

Therefore, in order to exceed Tally’s yield on a deposit of £ 10,000 or £ 20,000, you need to go for a longer fixed rate deal – for example, QIB’s five year fixed rate deal paying 2, 10%.

But there are other ways to increase your rate and get closer to the kind of returns Tally does indeed offer – and with the backstop of FSCS protection.

The Raisin Savings Platform offers a welcome bonus giving savers the chance to increase their savings by £ 50 when they open and fund an account in its marketplace with a minimum of £ 10,000.

Given that its current range of offerings are very competitive against the rest of the market, Raisin offers savers a chance to effectively exceed the best savings rates via its £ 50 bonus.

For example, his main one-year fixed rate contract offered by Charter Savings Bank pays 1.33%, but with the £ 50 welcome bonus added, a saver who hides £ 10,000 through Raisin’s best deal would end up with an effective rate of 1.83%. .

“I would recommend savers looking for a fixed return for 1 year to save with Zopa Bank or United Trust Bank (rather than Tally),” said Blower.

“Those looking to beat yield could look to UBL or Zenith Bank’s 3-year bond via – both paying 1.82%.

“If they invest at least £ 10,000 through Raisin, they will get a £ 50 bonus, which exceeds Tally’s effective rate of 1.9%, once the £ 20 fee is removed from an investment of £ 20,000. ”