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Cash Isa providers are battling to win new customers ahead of the end of the tax year by racing to offer increasingly large bonuses that send rates as high as 5.6 per cent.
A quartet of savings apps have all boosted rates repeatedly in the last week, with the top cash Isa rate of 5.6 per cent offered by both Trading 212* and Plum* rocketing from 5.28 per cent a week ago.
Chip* and Moneybox are also involved in the tussle, we reveal the full details below.
But with these bonus boosts only lasting three months, how good is the rate you’re really getting over the whole year?
These headline deals look attractive, but one provider’s rate plummets by 2.06 per cent after just three months, so it pays to factor this in when choosing where to stash your cash.
It’s also a good idea to consider how easy it is to access your money and whether withdrawals can reduce the interest you receive. For example, whereas some providers slash your rate after a certain number of withdrawals, others allow you to take money out as often as you like.
The short-term bonuses have fired these deals to the top of our cash Isa tables but we warn savers to beware their limited effect. This is Money works out the rate over the full 12 months for you below.
The best boosted cash Isas
Below we detail the top cash Isas with the three-month boosted rate, key features and an average rate over the past 12 months.
This was done by using the same simple average method for each account: three months at the higher rate and nine months at the standard rate. The actual rate savers receive will be slightly different due to interest being accrued daily or monthly.
Keep in mind that these Isa rates are variable, so while the bonus is locked in there’s no guarantee underlying rates will stay the same over the whole year.
Three-month bonus rate: 5.6%
Regular rate: 4.5%
Average rate over 12 months: 4.78%
This is Money says: Out of the Isa providers boosting rates, you could earn the most interest from Trading 212.
Trading 212’s Isa also allows unlimited withdrawals and is flexible, meaning you can withdraw money without affecting your allowance if you replace it in the same tax year. You can open an account with £1 and interest is paid monthly.
Three-month bonus rate: 5.55%
Regular rate: 4.32%
Average rate over 12 months: 4.63%
This is Money says: Chip trails slightly behind Trading 212’s Isa in terms of what you can earn on your savings, but it’s much the same when it comes to access to your money. It’s a flexible Isa and you can make as many withdrawals as you like.
You only need to deposit £1 to open an account and Chip pays interest monthly.
Three-month bonus rate: 5.56%
Regular rate: 4.2%
Average rate over 12 months: 4.54%
This is Money says: Moneybox’s Isa isn’t flexible, so if you withdraw money and then replace it, your allowance will be affected.
It’s also more restrictive, as while you can withdraw your money whenever you like, if you make more than three withdrawals a year your rate will reduce to 0.75%.
The rate also reduces when your balance drops below £500, which is the minimum you need to open an account. Moneybox pays interest yearly rather than monthly.
Three-month bonus rate: 5.6%
Regular rate: 3.54%
Average rate over 12 months: 4.1%
This is Money says: While Plum’s bonus Isa rate looks competitive, its regular rate is low, and the account isn’t flexible. You can’t withdraw money and replace it without affecting your allowance.
It is also more restrictive than some rivals, as you won’t get the bonus rate if you make more than three withdrawals.
You need a £100 minimum balance to qualify for the bonus rate. Plum pays interest monthly, but your bonus rate earnings will only be paid at the end of the three months.
The best cash Isas without a boost can win
Non-boosted cash Isa rates are worth considering
When you open a cash Isa from CMC Invest*, you could earn 4.85 per cent on your savings, which is higher than all the average rates listed above over the course of a full year. It’s also a flexible Isa that allows unlimited withdrawals.
Tembo, a mortgage and savings platform, is offering 4.8 per cent. While its Isa isn’t flexible, you can make unlimited withdrawals.
You can see our table of the best cash Isa rates to discover more deals.
Our regularly updated round-up tells you more about five of our favourite cash Isas.
