Savers can get easy-access cash with Isa by paying 5% – Moneybox offers best deal for 15 years
- Moneybox now pays 5% on tax-free deposits of £500 or more
- Up to three slowed withdrawals in a 12-month period from opening
- The rate includes a bonus rate of 0.85% for the first 12 months.
Moneybox has increased the rate on its cash Isa to 5 per cent, propelling it to the top of the best buys table.
This rate is available for deposits of £500 or more and includes a 0.85 per cent bonus for the first 12 months.
Moneybox launched its Cash Isa at the beginning of September and originally paid a rate of 4.65 per cent.
It is the first time since 2008 that savers can get a cash Isa by paying 5 per cent more, but back then the cash Isa limit was just £3,600 compared to £20,000 today.
Launched to the top: Moneybox has increased the rate on its ‘easy access’ cash Isa to 5%, propelling it to the top of the best buy tables.
Cash Isa is not strictly easy to access, as it only allows three withdrawals within each 12-month period from the account opening date.
If you make a fourth withdrawal, or if the amount in your account falls below £500, you will earn a rate of just 0.75 per cent on your savings for the remainder of that 12-month period or until your balance rises to £500.
Moneybox Isa allows transfers from other Isa providers.
The previous best cash buy Isa was offered by Coventry Building Society, paying 4.9 per cent.
This account offers four penalty-free withdrawals and you face a penalty of 50 days of lost interest if you make a fifth withdrawal.
The best no strings attached Isa comes from Shawbrook Bank, which pays a rate of 4.81 per cent; its easily accessible non-tax-free equivalent pays 5.11 percent.
> Check out the best cash Isas here in our savings tables
There has been a flurry of activity at the top of the best easy access Isas recently and cash Isa rates have slowly risen towards easy access levels.
Last week, Leeds Building Society increased the interest rate on its cash Isa to 4.8 per cent and Coventry Building Society quickly followed suit. This culminated in Moneybox’s decision to increase its cash Isa rate to 5 per cent.
The best easy access account, offered by Coventry Building Society, now pays 5.2 per cent.
More savers than ever have been funneling money into cash Isas due to rising interest rates.
Rising interest rates could lead to higher-net-worth savers defaulting on their individual savings allowance, which is why Isas offer considerably more adequate long-term tax-free benefits.
Now all eyes will be on easy-access cash Isas to see if they will continue to rise to match the top easy-access savings accounts.
Andrew Hagger, personal finance expert and founder of MoneyComms, doesn’t think this scenario is likely.
He says: “I don’t expect the higher easy access rates to rise much at this time, although we may start to see an increase in activity as we get to the end of the financial year, but that is still a few months away.”
To open a Moneybox account, you will need to download their app. Moneybox is part of the Financial Services Compensation Scheme, which protects savers to the tune of £85,000.