Moneybox increases the rate on its Cash Isa to a better buy of 5%

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Savings deals offering 5 percent are making a comeback, weeks after disappearing.

money app Piggy bank has increased its Easy Access Cash Isa deal to 5 per cent, pushing it to the top of the best buys table.

Yesterday, digital bank Chase raised its easy access rate* at 5 percent by adding a 1.5 percent bonus to the account.

The next best easy-to-access deal in This is Money’s Isa best buy tables pays 4.9 per cent, meaning Moneybox has now taken the top spot for best buy when it comes to the highest rate.

The move comes as the Bank of England voted yesterday to keep the base rate at 4.75 per cent.

Moneybox’s 5 per cent Easy Access Isa includes a bonus rate of 0.55 per cent for the first 12 months, meaning the underlying rate of the Isa is a variable rate of 4.45 per cent.

The rate is increasing from a variable 4.92 percent.

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. On a fourth withdrawal, the rate drops to 0.75 percent. Which is lower than most major banks.

The number of withdrawals you can make resets to the date you opened your cash Isa.

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

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

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

Money held in a Moneybox Isa is fully protected by FSCS. Moneybox uses a number of banks to provide FSCS protection for its cash Isa. He says these banks may change over time, but the banks he currently uses are:

• HSBC
• Santander United Kingdom
• National Westminster Bank
• Clydesdale Bank
• Bank of Scotland
• Lloyds Bank
• Qatar National Bank (QPSC)
• Abu Dhabi First 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 keep more than 50 percent of total funds in a single bank at any given time.

If you already have money in one of these banks, you’ll need to be careful not to go over the £85,000 limit if you keep money in Moneybox.

How does it compare to other top Isas?

While Moneybox offers the highest rate for a cash Isa, the withdrawal restrictions will prove a drawback.

For customers who want or need the freedom to tap into their savings more than three times in a 12-month period without interest rate penalties, Trading the 212 Cash Isa* – while offering a slightly lower rate of 4.9 percent – is a better option.

Customers opening the Moneybox Isa should be sure they won’t need to dip into their pot more than three times in 12 months and be careful their savings don’t fall below £500 or risk their rate dropping to just the 0.75 percent.

Trading with the 212 Isa is a flexible Isa that is a great benefit for savers with the financial power to maximize their Isa limit each year. Moneybox Isa does not have this feature.

Monument Bank has a cash Isa that pays 4.76 per cent on deposits from £10,000. Not so, but the higher deposit amount of £10,000 will hamper new savers with smaller funds. Existing customers can open an Isa with deposits starting from £1.

Like the Trading 212 deal, this Isa is a flexible Isa and can be opened in the Monument Bank app.