What you need to do if you’ve got savings or investments with the app.
The fintech app Claro launched last year, offering financial coaching and a best buy savings rate of 2%. Sadly the app is now closing down. Here’s what you need to know.
What did Claro do?
Like a lot of fintech, Claro started out with one aim (to provide financial coaching online), it gradually offered extras.
The main reason I’ve written about the app on this site is because last October it launched a savings account paying 2% interest on balances of up to £3,000 (though on iOS only). This made it one of the best paying accounts and was still one of my top picks for savers until now.
Why is Claro closing?
The email sent to customers on 18 July 2022 says the company is changing focus to offer business to business financial education and coaching, rather than direct to consumers.
As a result, new customers were unable to download the account, while free coaching calls were cancelled and the 2% bonus rate on savings was stopped on the linked savings account.
What it means for savers
The big concerns for savers will be what happens to their money and will they get their interest. Well the good news is you don’t need to worry.
Though the 2% offer has ended, Claro has said that they’ll calculate the interest due until the anniversary date of you opening the account, based on your balance as of 15 July 2022.
So if you opened the account in October, you’ll get another three months of interest. If you opened it last week then you’ll get a year’s worth. This final payment will be paid at the end of the month.
But you don’t need to keep your cash deposit or previously paid bonuses in the account until this happens. You can withdraw all the cash to your linked bank account now. It could take four working days for the money to reach your account.
Withdrawing your money
The bonus and savings are held in different pots in Claro so it can be a faff to find how to get your money.
Click the “Your plan” tab at the bottom of the app, then chose the goal with the money. You’ll see an underlined link in purple called “Payments”. Click that and you’ll see the option to withdraw funds. Don’t worry about the warning message that you’ll lose your bonus.
To find your bonus pot, follow the same steps but look instead for a purple link called “View your bonus pot”. You’ll be able to withdraw this money once you click that link.
What it means for investors
Though I don’t write about investing, some customers did use Claro for this and a question came up about this when I shared the news in my Facebook community.
General Investment Accounts (GIA) will be closed in the same way as the cash savings (technically the accounts are the same). This means if your investments have fallen in value you’ll get their current worth, not what you paid in.
Though you could just buy the same shares elsewhere if you’re confident they’ll increase, there could well be a delay while you’re waiting for the stocks to be sold and the balance paid out to you. In that time the value of those same shares could have changed. There are also fees to take into account from any new platform you use.
If the shares are held in an ISA with Claro then there’s the extra option of transferring the value to another provider. There’s a transfer process you need to follow for this – don’t just withdraw the money. This will protect your £20,000 annual allowance so is worth doing.
However, the new investing ISA provider will need to allow something called ‘in-specie” transfer where the same shares are moved across without being sold. If this isn’t available your shares in Claro will be sold and the cash transferred over instead.
What happens if you do nothing?
All existing accounts will be closed automatically on 17 August 2022. Any money left in them will be paid to your linked account.
If you want to close it earlier then you’ll need to email Claro, though they won’t process those requests until the final bonus is paid out.
Where else can I put my savings?
For those who had the Claro app for savings, this will be a blow. There are still very few easy access accounts paying 2%.
But that could change. The base rate is due to increase again in August and possibly in September too. And it might be we see a larger 0.5 percentage point increase too.
Though it takes time for banks to pass on these increases to their savers, I think it means we could see close to 2% rates from a number of providers by late September.
So you could just put that money in the best available rate right now and wait, or you could hedge your bets and fix for six months at 2%. The risk here is rates on easy access accounts go well beyond this much sooner.
And this is assuming you’ve taken advantage of other accounts that pay the same or more than 2% already.
The Nationwide FlexDirect current account pays 5% on the first £1,500 saved, but only for a year and only the first time you have this account (if you’ve had it in the past you’re out of luck). The Virgin Money M Plus account pays 2.02% on £1,000 and 1.71% on up to £25,000 after this. You can technically only have one personal and one joint account here, though there’s a loophole that might lets you get more, even if only temporarily.
Regular savers can also pay much more, but you can only save smaller amounts. The highest paying are 3.5% via First Direct and 3.3% via Natwest and RBS.