Best buy flexible easy-access cash Isa launched by Trading 212 – is it a good home for your tax-free pot?
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A new easy-access cash Isa has launched from trading and investing platform Trading 212, available to new and existing customers.
The Trading 212 cash Isa* pays a table-topping rate of 5.2 per cent, the highest rate available on an easy-access tax-free account.
It has knocked Plum’s cash Isa – paying a rate of 5.17 per cent – from the top spot. Unlike Plum’s Isa, there is no bonus rate included in the 5.2 per cent headline rate.
Turbo boost: Trading 212 has launched a cash Isa paying 5.2%, rocketing to the top of the best buy tables
Trading 212’s 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.
The new Isa can only be opened on Trading 212’s app with a deposit starting from £1.
Is it protected by FSCS?
Trading 212 says on its website that any money held in a cash Isa 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 the firm fails.
Funds in the Trading 212 Isa are held in partner bank accounts with Barclays, NatWest and JPMorgan.
But one savings insider said they would advise any savers with high balances with Barclays, JP Morgan (including Chase) or NatWest to be careful with how much they save with Trading 212.
That is because Trading 212 uses these banks for its FSCS protection.
Trading 212 is an FCA-regulated firm and an Isa manager registered with HMRC, which is why it is able offer a cash Isa to savers despite being an investing app – and not having a banking licence.
It is not unusual for firms who are not banks or building societies to lean on other institutions for FSCS – but using three different banks is not common.
Our savings insider said: ‘It is unusual that they are using multiple banks for their clients’ money and thus the FSCS coverage.
‘What’s more concerning though is that this is not shown on their website and it makes it very complicated for FSCS coverage.’
This is because there is not a separate coverage limit for clients money protected under the FSCS. It is also not clear how savers’ money is split.
If an Isa saver puts £20,000 in a Trading 212 Isa and it is placed in Barclays, and that saver already has more than £65,000 with Barclays direct, the amount over this will be unprotected.
It is the same with NatWest and JPMorgan – which uses the Chase brand in the UK – and has acquired a large following.
How does it compare to other top Isa deals?
Plum
Plum’s cash Isa* is the next best easy-access cash Isa on the market after Trading 212’s paying 5.17 per cent. But it comes with a lot more catches.
The rate includes a bonus of 0.88 per cent for the first 12 months. After 12 months, the rate drops to 4.29 per cent.
Plum’s Isa allows transfers in from other Isa providers, but if you transfer in an existing Isa you will get 4.29 per cent rather than 5.17 per cent.
If your balance dips below £100, or, if you make more than three withdrawals within a year – the rate will drop to 3 per cent. The minimum deposit needed is £100.
This account can only be opened by downloading Plum’s app. The minimum deposit needed to open an account is £1.
All money deposited in Plum’s deal is held by Citibank, and is eligible for Financial Services Compensation Scheme protection of up to £85,000 per person.
Chip
Chip’s cash Isa* pays 5.1 per cent. The account is also fully flexible, allowing savers to instantly deposit and withdraw their money with no restrictions and without affecting their Isa allowance.
This means savers can replace any money they withdraw from their Isa without it counting towards their yearly 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 needed to open an account.
At present, Chip does not allow savers to transfer funds across from another cash Isa. This is a major drawback to savers wanting to transfer an existing Isa.
The interest rate is variable and tracks at 0.26 per cent below the current Bank of England base rate.
When the base rate moves up or down, the savings rate will move on the same day.
As the Bank of England is expected to cut interest rates this summer, Chip savers may see their rate fall to 4.73 per cent if the base rate is cut to 5 per cent or 4.49 per cent if the base rate falls to 4.75 per cent.
All money deposited in Chip’s deal is held by ClearBank, and is eligible for Financial Services Compensation Scheme protection of up to £85,000 per person.
Zopa
Another table-topping easy-access cash Isa deal is currently offered by Zopa Bank.
Its Smart Isa offers 5.08 per cent, which includes a 0.5 per cent bonus rate which runs for one year from the date of opening the Isa.
The underlying rate is 4.48 per cent and this is the rate savers will receive when the bonus ends.
Zopa’s Smart Isa is a hybrid cash Isa, combining easy access and fixed term functionalities under one roof.
It also allows savers to transfer in from another cash Isa provider, which is a big plus.
This account can only be opened by downloading Zopa’s app. You can start saving with a deposit of £1.
Eligible deposits with Zopa are protected up to a total of £85,000 by the Financial Services Compensation Scheme.
> See the top cash Isa deals on This is Money’s independent best buy tables
Charter Savings Bank
Charter Savings Bank’s cash Isa pays a rate of 4.97 per cent. This is the best cash Isa savers will find that doesn’t require an app.
It can be opened online on Charter Savings Bank’s website with a minimum of £5,000 and it does allow transfers in from another provider. However, it is not a flexible Isa.
Charter Savings Bank also offer a cash Isa platform called the Mix & Match Isa. This allows savers to have more than one Isa within your cash Isa allowance.
Who is Trading 212?
Trading 212 is a trading and investing app which was founded in 2004. It offers low cost trading and investments. It is free to hold a cash Isa account with Trading 212.
It is the latest of a raft of low-cost trading and investing apps to offer a cash Isa paying a bumper rate.
In order to get the rate, customers need to hit the ‘earn interest on cash’ feature on the app.
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