Money app Plum has raised the interest rate on its easy access Cash ISA to a bumper 5.36% for new customers. The account takes a “market-leading” position in its sector, and savers can launch it with a minimum deposit of £1.
The rate includes a bonus of 1.82% AER for the first three months, after which the rate will drop. Up to three withdrawals are permitted per 12-month period, and basic interest (3.54%) is paid monthly, but the bonus (1.82%) will be paid after three months. Cash ISAs have grown in popularity over the past few years as higher interest rates drag more people into savings tax thresholds. These accounts allow individuals to save up to £20,000 a year tax-free, making them a key tool for savvy savers.
While Plum is offering the top rate for easy access ISA savers, there are some key terms to be aware of. Firstly, the full 5.36% interest rate is only offered for three months, so customers should review the account at that point to check if it’s still priced competitively.
Secondly, just three withdrawals are permitted per calendar year, penalty-free. On the fourth withdrawal, the rate will drop to 2.5%.
What else is out there?
For savers looking for more flexibility with withdrawals, Trading 212 joins Plum with the market-leading 5.36% Annual Equivalent Rate (AER).
The deal includes a bonus rate of 0.86% for three months, and savers can launch the account with just £1. Interest is paid monthly, and withdrawals are not restricted.
Investment app Moneybox places just behind with an AER of 5.32%. The offer includes a 1.12% bonus rate for the first three months, and savers can launch the account with a minimum deposit of £500. However, like Plum, a lower interest rate will be paid if more than three withdrawals are made in one year.
Savings app Chip places just behind with an AER of 5.26%. The rate includes a 0.90% bonus for new customers for the first three months. The account can be opened with just £1, interest is paid monthly, and there are no withdrawal restrictions.
To receive the bonus rate, savers simply need to enter the code “ISASEASON” on Chip’s website. After the initial bonus period, the interest rate will revert to Chip’s standard rate of 4.32% AER, so it’s important for savers to review their accounts regularly to ensure they’re still getting a competitive return.
The new tax year will start again on April 6, meaning savers have just under one week to use or lose their £20,000 ISA allowances.
Jason Hollands, managing director at investment platform Bestinvest, said: “ISAs are a cornerstone of tax-efficient investing in the UK, but it is important to understand that they are a ‘use it or lose it’ allowance. Don’t let this allowance slip away—it doesn’t roll over.”
