Two providers now offer easily accessible cash. Isas pay 5.17% – which is best?

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A mini-battle has broken out between two providers to top the Isa chart for the best buy and easy-to-access cash.

Trading 212 and Moneybox have both moved to increase their easy-access Isa rates to an unprecedented 5.17 per cent.

This rate blows the competition out of the water, as the next best, easily accessible deal on This is Money’s Isa best buy tables pays around 4.9 percent.

Trading 212 raised the rate to 5.17 percent today, after raising rates to 5.15 percent on October 31, while Moneybox made the same move.

This is Money compares these best buy accounts as if to run the rule over them.

Trade 212

Trading 212’s cash Isa* launched in May 2024. It has proven extremely popular with savers due to the high interest it pays and the lack of restrictions or penalties on withdrawals, making it a truly easy-to-access account.

Flexible Isas allow you to dip into your pot and, as long as you put the money back in during the same tax year, it won’t lose its tax-free wrapper or use up that year’s £20,000 Isa allowance.

The Isa can only be accessed by downloading the Trading 212 app. There are no limits to the number of times you can withdraw your money and Trading 212 will not reduce your interest rate for accessing your money.

The interest is paid out daily and customers can see in the app how much money their savings have built up per day. Customers can start saving in Trading 212’s Isa with £1.

The rate is variable, meaning it can increase or decrease depending on market conditions. It does not include a bonus rate.

You can transfer Isa’s that you hold with other providers to Trading 212’s Isa.

Is your money safe?

Money held in Trading 212’s Isa is fully FSCS protected. Funds in the Trading 212 Isa are held in partner bank accounts at Barclays, NatWest and JPMorgan.

Customers can see what percentage of their money is eligible for interest at each bank on the cash tab in the Trading 212 app.

It means that if you already have money in Barclays, NatWest or JPMorgan, you’ll need to be careful not to exceed the £85,000 limit when putting money away with Trading 212.

Money box

Money boxes The 5.17 per cent Easy Access Isa includes a bonus rate of 0.47 per cent for the first 12 months, meaning the Isa’s underlying rate is a variable 4.7 per cent.

The account can only be opened by downloading the Moneybox app with a minimum deposit of £500.

You can only make three free withdrawals in a 12-month period with this Isa. With a fourth withdrawal, the rate drops to 0.75 percent. The number of withdrawals you can make will reset on the date you open your cash Isa.

If your Isa balance falls below £500, your rate will also drop to 0.75 per cent.

You can transfer the Isas you have with other providers to the Moneybox Isa. Interest is calculated daily and paid out annually.

This Isa is not a flexible Isa, so any money you take out cannot be replaced within the same tax year without affecting your £20,000 Isa allowance. You will lose the amount you withdraw from the allowance.

Is your money safe?

The money held in the Moneybox Isa is fully FSCS protected. Moneybox borrows from several banks to provide FSCS protection for its cash Isa. It says these banks may change over time, but the banks currently in use are:

• HSBC
• Santander UK
• National Westminster Bank
• Clydesdale Bank
• Bank of Scotland
• Lloyd’s Bank
• Qatar National Bank (QPSC)
• First Abu Dhabi Bank PJSC
• National Bank of Kuwait (international)
• The Bank of New York Mellon, London branch

The amount of money held in each bank can vary over time. Moneybox says it will never hold more than 50 percent of its total funds in one bank at a time.

If you already have money with one of these banks, you’ll need to be careful not to exceed the £85,000 limit when putting money away with Moneybox.

The verdict

For customers who want or need the freedom to tap their savings more than three times in a twelve-month period without interest penalties, Isa from Trading 212 is the clear winner.

Moneybox’s Isa has a range of penalties, so customers can be sure they don’t have to dip into their pot more than three times in 12 months and ensure their savings don’t drop below £500 or risk losing their interest rate drops to just 0.75 percent. .

Trading the 212 Isa is a flexible Isa, which is a big advantage for savers with the financial firepower to maximize their Isa limit every year. Isa from Moneybox does not have this function.

How a reduction in the base rate would affect these rates

By increasing their interest rates, Trading 212 and Moneybox are bucking the trend of providers lowering savings interest rates.

But the rate hike comes as the Bank of England is widely expected to cut interest rates to 4.75 percent from 5 percent at tomorrow’s Monetary Policy Committee meeting.

This raises the question of how long this Isa rate that is on the table will last.

The last time the Bank of England cut the base rate from 5.25 per cent to 5 per cent in August, This is Money analysis found that more than 100 savings accounts had their rates cut or were taken out of the market entirely in the week after the base rate was achieved. interest rate reduction.

Even if the Bank keeps the base interest rate at the current level, savings providers can respond by lowering the interest rate.

When the Bank of England kept the base rate at 4.75 percent in September, Trading 212 responded by cutting the Isa rate from 5.2 percent to 5 percent.

Moneybox’s interest rate is also variable, so it could drop if the base rate is lowered tomorrow.