Trading 212 boosts its greatest purchase Isa to five.1%
- Trading 212’s tax-friendly account pays a market-leading 5.1%
Products featured in this article are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.
Savings rates have plummeted since the Bank of England cut the base rate to 5 per cent in August.
And now that it has been held at 5 per cent by the Bank of England today, savings experts predict rates are more likely to fall than rise.
But the silver lining is that savers can still find top savings rates that easily outstrip inflation of 2.2 per cent.
Silver lining: Trading 212’s cash Isa pays a 5.1% rate at a time where savings rates are being cut
Trading and Investing platform Trading 212’s has bucking the trend this week of providers cutting rates by boosting its easy-access cash Isa* deal to 5.1 per cent.
Even before the boost it paid a market-leading 5 per cent rate.
Trading 212 launched its cash Isa in May to new and existing customers.
When it launched, it paid a table-topping rate of 5.2 per cent, the highest rate available on an easy-access tax-free account.
Earlier this month, the rate dropped to 5 per cent for new and existing customers. But despite this, it was still the highest cash Isa rate on the market and it now beats the rest by a fair margin.
It beats Plum’s cash Isa which pays 4.92 per cent and Chip’s flexible tax-free Isa* which pays 4.84 per cent.
The average easy-access Isa pays a rate of 3.27 per cent according to rates monitor Moneyfacts Compare.
Trading 212’s cash Isa* is a flexible Isa, meaning you can withdraw money from the Isa and replace it without affecting your Isa allowance, provided you replace it within the same tax year.
The Isa can only be opened on Trading 212’s app with a deposit starting from £1.
Is it protected by FSCS?
Trading 212 says on its website that any money held in a cash Isa will be protected under the Financial Services Compensation Scheme up to £85,000.
FSCS protects customers’ money up to a value of £85,000 in the event the firm fails.
Funds in the Trading 212 Isa are held in partner bank accounts with Barclays, NatWest and JPMorgan.
Trading 212 is an FCA-regulated firm and an Isa manager registered with HMRC, which is why it is able offer a cash Isa to savers despite being an investing app – and not having a banking licence.
It is not unusual for firms who are not banks or building societies to lean on other institutions for FSCS – but using three different banks is not common.
Previously, customers were not able to see which of the three banks their money would be kept with for FSCS protection, but Trading 212 has changed this and customers are now able to see the percentage of their cash held at each bank is in the interest on the cash tab in the Trading 212 app.
It means if you already have money in Barclays, NatWest or JPMorgan, you’ll need to be mindful not to breach the £85,000 limit if you put money away with Trading 212.
How does it compare to other top Isa deals?
Chip
Chip’s flexible cash Isa* is the next best easy-access cash Isa on the market after Trading 212’s paying a rate of 4.84 per cent.
Like Trading 212’s cash Isa, it is a flexible Isa and it offers a competitive rate for customers who want to dip in and out of their pot without using up their Isa alowance in the process.
There are no limits to how many times you can withdraw your money and Chip will not reduce your interest rate for accessing your money.
It tracks at 0.26 per cent below the current base rate, which stands at 5 per cent. Previously this account paid 5.1 per cent, when the base rate was at 5.25 per cent.
When the base rate moves up or down, your savings rate will move on the same day.
This account can only be opened by downloading Chip’s app. The minimum deposit needed to open an account is £1.
All money deposited in Chip’s deal is held by Clear Bank, and is eligible for Financial Services Compensation Scheme protection of up to £85,000 per person.
Plum
Plum’s cash Isa* pays 4.84 per cent but it includes a bonus rate of 0.88 for the first 12 months.
If your balance dips below £100, or you make more than three withdrawals in a year, the rate drops to 3 per cent.
The other drawback with Plum’s account is that it is not flexible. Flexible cash Isas are a great savings tax-beating tool, as they can allow you to dip into your pot and as long as you put the money back in during the same tax year, it doesn’t lose its tax-free wrapper or use up any of that year’s Isa allowance.
This account can only be opened through Plum’s app with a minimum deposit of £100. Any cash deposited is fully FSCS protected by CitiBank.
Cynergy Bank
Cynergy Bank’s cash Isa pays a rate of 4.82 per cent. This is the best cash Isa savers will find that doesn’t require an app to be downloaded.
It can be opened online on Cynergy Bank’s website with a minimum of £1 and it does allow transfers in from another provider. However, it is not a flexible Isa.
All money deposited is eligible for Financial Services Compensation Scheme protection of up to £85,000 per person.
Who is Trading 212?
Trading 212 is a trading and investing app which was founded in 2004. It offers low cost trading and investments. It is free to hold a cash Isa account with Trading 212.
It is the latest of a raft of low-cost trading and investing apps to offer a cash Isa paying a bumper rate.
In order to get the rate, customers need to hit the ‘earn interest on cash’ feature on the app.
SAVE MONEY, MAKE MONEY
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
