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Cash Isa providers have been inching rates up, bucking the trend of Bank of England cuts.
The central bank voted to lower the base rate to 3.75 per cent in December. Analysts expect further cuts this year, but the pace remains uncertain with a 5 February cut hanging in the balance.
Despite the backdrop being one of declining rates, a trio of Isa providers at the top of our best-buy cash Isa table – Trading 212*, Plum* and Moneybox – have been hiking rates.
These providers regularly battle on rates, attempting to win over savers’ money.
Each of these providers offers a 12-month boost for new customers. This is usually fixed, which means you can lock in a rate that should comfortably beat the base rate over the next year.
The Etoro cash Isa* remains a best buy at 4.49 per cent, which includes a 0.8 per cent boost for 12 months, but comes with a catch as it uses money market funds rather than traditional cash deposits.
We run the rule over the top deals below.
Cash Isa providers regularly hike rates, tempting savers to shift money
Etoro: 4.49% (0.8% boost for 12 months)*
- Minimum deposit: £500
- Transfers: Yes – minimum £15,000 to qualify for this rate
- Withdrawal restrictions: Must keep a £500 balance and make no more than three withdrawals to maintain boost
Etoro’s cash Isa has sat at 4.49 per cent for the last few weeks, with the investment platform avoiding the latest rate war.
This deal is part of a promotion for new customers that ends on 28 February. The boost is fixed at 0.8 per cent, but the underlying rate can change over the 12 months.
Interest accrues daily. Etoro pays interest from the boost as a lump sum in the month following the anniversary of your first deposit, provided you meet all the conditions of the bonus.
We like that it’s a flexible Isa, which means you can withdraw money and replace it in the same tax year without affecting your balance.
But beware that benefit is limited, because the rate drops to 3.49 per cent if you make more than three withdrawals in the 12 months, or your balance drops below £500.
Etoro holds your money in a qualifying money market fund (QMMF), which invests in low-risk, short-term assets. The platform says your money is protected by the Financial Services Compensation Scheme (FSCS).
Trading 212: 4.38% (0.78% boost for 12 months)*
- Minimum deposit: £1
- Transfers: Yes (boosted rate only applies to current tax year subscriptions)
- Withdrawal restrictions: None
Trading 212 regularly tinkers with its boosted rate for new customers. But this is the highest it’s been for several months, so if you’ve been considering this deal, it could be worth locking in the bonus.
In our view this is a standout cash Isa, because there aren’t many hoops to jump through to get the boost. You won’t be punished for withdrawing your money and it has a low minimum deposit.
It’s a flexible Isa, so your allowance won’t be affected when withdrawing, provided you replace it in the same tax year.
And the underlying rate is strong, with the boosted element constituting a lower portion of the 12-month rate than other providers.
> Open a Trading 212 cash Isa*
Moneybox: 4.39% (0.94% boost for 12 months)
- Minimum deposit: £500
- Transfers: Yes
- Withdrawal restrictions: No more than three withdrawals without affecting your bonus rate, must also keep balance above £500
Moneybox consistently offers a top boosted rate, however the cash Isa is let down by penalties for withdrawing.
It’s still a good option if you don’t think you’ll need access to the money, and the boosted rate applies to transfers – which isn’t the case with certain accounts we highlight.
Rather than just losing the boost, the interest rate plummets to 0.75 per cent if you make more than three withdrawals in the year or when your balance falls below £500.
The Isa also isn’t flexible, so withdrawals will hit your allowance for that tax year.
Moneybox offers a cash Isa that doesn’t have withdrawal restrictions at a lower 4.1 per cent rate, including a 0.85 per cent bonus for a year.
Plum: 4.36% (1.82% bonus for 12 months)*
- Minimum deposit: £1
- Transfers: Yes (but these funds won’t receive the boosted rate)
- Withdrawal restrictions: None
Plum removed penalties for withdrawing money from its cash Isa towards the end of last year, after This is Money consistently wrote that they held the account back.
Trading 212’s Isa still pips this account, because Plum’s option isn’t a flexible Isa, and no transferred funds will receive the bonus rate.
The underlying rate is also relatively poor at 2.54 per cent currently.
All this being said, in our view it’s now a better alternative for those who may have exhausted bonus rates elsewhere.
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