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Savings and investing platform Prosper has launched its first cash Isa offering a rate of 4.5 per cent, which includes a 12-month boost for new customers.
This deal rockets Prosper to the top of our best-buy cash Isa table, beating rates from Etoro at 4.44 per cent and Trading 212 at 4.4 per cent.
Prosper’s 12-month boost is 1.72 per cent, making the underlying rate 2.78 per cent.
Prosper is a newer savings and investing platform, challenging more established providers by slashing investment fees and boosting interest rates on its savings accounts.
We like that its cash Isa is flexible, meaning you can withdraw money and replace it in the same tax year without reducing your Isa allowance. We compare accounts in more detail below.
How does Prosper’s cash Isa compare?
Prosper's new account* compares well with other best buys. It’s a flexible Isa and your funds are FSCS protected up to £120,000.
It doesn’t punish you by cutting your rate after a few withdrawals either, so the account is truly flexible.
But unlike other accounts, Prosper requires a high minimum deposit of £10,000 – and it doesn’t currently accept transfers in.
You need a much lower £500 to open a cash Isa with Etoro, while Trading 212 only asks for £1 to open your account.
Still, if you have the funds and you’ve exhausted time-limited boosts from other providers, Prosper’s cash Isa is worth considering.
Prosper's underlying rate tracks the base rate minus 1 per cent gross, so you should only expect your rate to shift when the Bank of England announces a rate change.
| Prosper | Etoro | Trading 212 | |
|---|---|---|---|
| Boosted rate (AER) | 4.5% (1.72% boost) | 4.44% (1% boost) | 4.4% (0.8% boost) |
| Underlying rate (AER) | 2.78% | 3.44% | 3.6% |
| Flexible? | Yes | Yes (but you lose boost after three withdrawals) | Yes |
| Transfers | No | Yes | Yes (boosted rate only applies to this year’s deposits) |
| Minimum deposit | £10,000 | £500 (£15,000 for transfers) | £1 |
| Source: This is Money, based on published information | |||
> Find out more about Prosper's cash Isa*
What to watch out for with 12-month boosts
In recent years, cash Isa providers have been offering 12-month boosted rates in a bid to lure new customers.
These boosts propel advertised rates to a level high above the base rate, helping savers earn a good return over 12 months.
However, the rate can drop to a much less attractive underlying rate after the year, so savers should be prepared to shop around when the boost ends.
You should also watch out for providers that remove your boost on your fourth withdrawal in the year. Providers currently doing this include Etoro and Moneybox, while Plum removed penalties after This is Money consistently wrote that they held its cash Isa back.
> Read more: Five of the best cash Isas
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