Investment platform Trading 212 has launched a “market-leading” easy access Cash ISA with a 5.2 percent interest rate.
The new deal has been praised as a “great choice” by the money comparison site Moneyfactscompare, due to its interest rate significantly beating the average for savings accounts in this category.
Rachel Springall, finance expert at Moneyfactscompare.co.uk said: “The market-leading Cash ISA from Trading 212 is a great choice for savers who want complete flexibility with deposits and withdrawals and pays much more than the market average easy access Cash ISA of 3.31 percent gross.
“Easy access cash ISAs are ideal for those who want quick access to their funds, whereas fixed ISAs are more suited to those who want a guaranteed return of interest.
“Savers are also permitted to transfer funds from either a Cash ISA or Stocks and Shares ISAs, as well as APS and Flexible ISA rules apply.”
Ms Springall noted that the rate is paid on any balance up to the full ISA allowance of £20,000, so it’s “transparent” and has no tiered rates.
She added: “The interest is also paid daily, so every day a saver would receive interest that then accrues additional interest.
“Those savers who are not familiar with the brand will find funds are protected under the Financial Services Compensation Scheme (FSCS), the same as the biggest high-street banks.”
Cash ISAs have become even more popular in recent years, with frozen allowances and higher interest rates dragging more savers into paying tax on their pots.
Cash ISAs enable Britons to save up to £20,000 a year tax-free, making them an attractive option for those looking to maximise their savings without incurring additional taxes.
Ms Springall said: “Savers who invest in an account that does not have a tax-free wrapper could end up breaching their Personal Savings Allowance (PSA).
“Indeed, higher rate taxpayers have a £500 limit on any interest earned, and basic rate taxpayers get a £1,000 limit.”
Putting the warning into context with current interest rates on offer, Ms Springall said: “Those who invest a £20,000 lump sum in an account that pays five percent for one year will earn £1,000.”
While Trading 212 may be offering the top rate for easy access Cash ISAs, competition doesn’t fall too far behind.
Plum falls just behind with an Annual Equivalent Rate (AER) of 5.17 percent off a £100 deposit. The interest rate includes a 0.86 percent bonus for 12 months. Interest is paid monthly and up to three withdrawals are permitted without facing a lower interest rate.
For those looking for more flexibility, Chip is offering an AER of 5.1 percent with unlimited withdrawals. Savers need just £1 to launch an account and interest is paid monthly.
