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New easy-to-access Isa launched from investing and budgeting app Plum.
THE Plum Cash Isa* pays a rate of 5.15 per cent, which is now the best easy-access cash Isa on the market.
However, it can only be opened by downloading the Plum app, and the price includes a 0.86% bonus for the first 12 months. After 12 months, the rate drops to 4.29 percent.
There are also some big pitfalls that savers should watch out for with this account.
Plum’s Isa allows transfers from other Isa providers, but if you transfer to an existing Isa you’ll get 4.3 per cent instead of 5.15 per cent.
Ahead: Plum has launched an easy access cash Isa at 5.15%, beating all other easy access cash Isas.
If your balance drops below £100 or you make more than three withdrawals in a year, the rate will drop to 3%. The minimum deposit required is £100.
All money deposited into Plum’s Isa is eligible for Financial Services Compensation Scheme protection of up to £85,000 per person.
This FSCS protection means savers’ cash is protected by up to £85,000 per person in the event the company goes bust.
The money is deposited with Citibank, which manages Plum’s accounts because it does not have a full banking license.
A Plum spokesperson said: “In the unlikely event of Citibank going bankrupt, your money will be safe. »
Best rates reserved for digital Isas
Alongside Plum, the other easiest Isa rates to access also come from app-based providers.
Chip* has an Easy Access Isa which pays 5.11 per cent and Zopa offers a rate of 5.08 per cent on its Smart Easy Access Isa and both are app only.
Chip’s Isa is fully flexible, allowing savers to instantly deposit and withdraw their money without restrictions and without affecting their Isa allowance.
It does not allow transfers from other providers, which is a big drawback. Zopa’s Isa allows transfers.
Moneybox also has a Cash Isa which earns 5.11 per cent and like Plum’s Isa this is increased by a bonus rate of 0.96 per cent for the first 12 months.
You can transfer an existing Isa into Moneybox’s Isa.
Moneybox allows up to three withdrawals every 12 months.
If you make a fourth withdrawal or your Isa balance drops below £500, the rate drops to just 0.75%.
At the moment, the easiest Isa rates to access seem to be reserved for those who don’t mind downloading an app and managing their Isa money from their phone or tablet.
For those who don’t want to download an app, Charter Savings Bank has an easy-access Isa paying 5.06 per cent which can be opened and managed online.
Kent Reliance has a fee-based easy access Isas at a rate of 5.01 which can be opened online or at a Kent Reliance branch.
Savers flock to Isas to shelter themselves from tax on savings interest
Savings interest rates are at their highest level for 15 years, a large reason why the Bank of England raised its base rate to 5.25 per cent.
However, as income tax thresholds have been frozen, rising savings rates mean more people are forced to pay tax on interest earned.
Between 2022-23 and 2028-29, this set of threshold freezes means almost 4 million more people will have to pay income tax, 3 million more will have moved to the highest rate and 400,000 more will at the additional rate according to the OBR.
With this in mind, British savers are increasingly turning to Isas. The latest figures from the Bank of England suggest that overall monthly contributions averaged £4bn net per month over the previous 12 months, compared to more than £1bn net withdrawn in March 2017 .
Victor Trokoudes, CEO and founder of Plum, said: “We believe in rewarding savers, and that’s why we’re really excited to launch our market-leading Isa.
“Cash Isas are not a new concept, but we’ve reinvented it by doing it intelligently, so savers can also benefit from Plum’s automation.
“You can open an account in just a few clicks and easily manage it in the app, alongside your other savings and investment tax packages.
“Customers can have peace of mind knowing their money is safe, while still benefiting from the £20,000 Isa allowance. And they know they’re getting the best rate with Plum.
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