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A new, easy-to-access cash Isa has launched from trading and investment platform Trading 212, available to new and existing customers.
The Trading in 212 cash Isa* pays a table-topping rate of 5.2 percent, the highest rate available on an easy-access tax-free account.
It has knocked Plum’s cash Isa, which pays a rate of 5.17 per cent, out of the top spot. Unlike Plum’s Isa, there is no bonus rate included in the nominal rate of 5.2 percent.
Turboboost: Trading 212 has launched a cash Isa paying 5.2%, rocketing it to the top of the best buy tables
Trading the 212 cash Isa is also flexible, 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.
Flexibility can be a useful tool in an Isa to ensure you keep as much of your savings as possible tax-free
The new Isa can only be opened on the Trading 212 app with a deposit of as little as £1.
Is it protected by FSCS?
Trading 212 says on its website that all money held in cash will be protected under the Financial Services Compensation Scheme (FSCS) up to £85,000.
FSCS protects customers’ money up to a value of £85,000 in the event of the company going bust.
Funds in the Trading 212 Isa are held in partner bank accounts at Barclays, NatWest and JPMorgan.
But a savings insider said they would advise savers with high balances at Barclays, JP Morgan (including Chase) or NatWest to be careful about how much they save with Trading 212.
That’s because Trading 212 uses these banks for its FSCS protection.
Trading 212 is an FCA regulated company and an Isa manager registered with HMRC. That’s why it can offer a cash Isa to savers, despite being an investment app and not having a banking license.
It is not unusual for companies that are not banks or building societies to rely on other institutions for FSCS, but the use of three different banks is not common.
Our savings insider said: ‘It’s unusual for them to use multiple banks for their customers’ money and therefore FSCS cover.
‘What is more worrying, however, is that this is not reflected on their website, which makes it very complicated for FSCS coverage.’
This is because there is no separate coverage limit for customer money protected under the FSCS. It is also not clear how savers’ money is distributed.
If an Isa saver puts £20,000 into a Trading 212 Isa and it is placed into Barclays, and that saver already has more than £65,000 with Barclays direct, then the amount above that is unprotected.
The same goes for NatWest and JPMorgan – which uses the Chase brand in Britain – and has developed a large following.
How does it compare to other top Isa deals?
Plum
Plum’s money Isa* is the second best easy access cash Isa on the market, behind Trading 212’s 5.17 per cent payment. But it comes with many more catches.
The rate includes a bonus of 0.88 percent for the first twelve months. After twelve months the rate drops to 4.29 percent.
Plum’s Isa allows transfers from other Isa providers, but if you switch into an existing Isa you get 4.29 per cent instead of 5.17 per cent.
If your balance falls below €100, or if you make more than three withdrawals within a year, the rate drops to 3 percent. The minimum deposit required is €100.
This account can only be opened by downloading the Plum app. The minimum deposit required to open an account is €1.
Any money paid into Plum’s deal will be held by Citibank and eligible for Financial Services Compensation Scheme protection of up to £85,000 per person.
Chip
Chip’s money Isa* pays 5.1 percent. The account is also completely flexible, allowing savers to deposit and withdraw their money immediately, without restrictions and without affecting their Isa balance.
This means savers can replace any money they withdraw from their Isa without it counting towards their annual Isa allowance, as long as they replace the money in the same tax year.
This account can only be opened by downloading Chip’s app. There is no minimum deposit required to open an account.
Currently, Chip does not allow savers to transfer money to another cash Isa. This is a major disadvantage for savers who want to transfer an existing Isa.
The interest rate is variable and is 0.26 percent below the current Bank of England base rate.
When the base interest rate goes up or down, the savings interest rate moves along with it on the same day.
With the Bank of England expected to cut interest rates this summer, chip savers could see their interest rate drop to 4.73 percent if the base rate is lowered to 5 percent, or to 4.49 percent if the base rate falls to 4.75 percent.
Any money paid into Chip’s deal will be held by ClearBank and will be eligible for Financial Services Compensation Scheme protection of up to £85,000 per person.
There you go
Another easily accessible Isa deal is currently offered by Zopa Bank.
The Smart Isa offers 5.08 per cent, including a 0.5 per cent bonus percentage that is valid for one year from the date the Isa is opened.
The underlying interest rate is 4.48 percent and this is the interest that savers receive when the bonus expires.
Zopa’s Smart Isa is a hybrid cash Isa, combining easy access and fixed-term features under one roof.
It also gives savers the option to transfer money from another Isa money provider, which is a big plus.
This account can only be opened by downloading the Zopa app. You can start saving with a deposit of €1.
Eligible deposits at Zopa are protected by the Financial Services Compensation Scheme up to a total of £85,000.
> See the best Isa money deals on This is Money’s independent best buy tables
Charter Savings Bank
Charter Savings Bank Isa cash pays a rate of 4.97 per cent. This is the best money Isa savers can find that doesn’t require an app.
It can be accessed online on the Charter Savings Bank website with a minimum amount of £5,000 and allows transfers from another provider. However, it is not a flexible Isa.
Charter Savings Bank also offers a cash Isa platform called the Mix & Match Isa. This allows savers to have more than one Isa within your cash ISA allowance.
Who trades in 212?
Trading 212 is a trading and investing app that was founded in 2004. It offers low-cost trading and investing. It’s free to hold a cash Isa account with Trading 212.
It’s the latest in a series of low-cost trading and investing apps offering Isa cash at a bumper rate.
To get the rate, customers need to click on the ‘earn interest on cash’ app.
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