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A last minute rush of cash Isa hikes has sent rates to almost 6 per cent.
Plum* today launched a fresh boosted rate for savers, with new customers able to earn 5.92 per cent on their money for three months.
This comes at the end of a week-long battle among savings apps to win customers by offering boosted rates, with Plum leading picks on short-term rates from the likes of CMC Invest*, Trading 212* and Chip*.
But as we reveal below the highest headline rate may not be the best deal. Boosted rates give temporary extra interest for a set period, before the rate falls back to a lower level.
The end of the tax year is fast approaching and last-minute savers now have several last ditch options for maximising their Isa allowance before the new tax year starts on 6 April.
Isa season: Providers are upping their rates daily on the tax-free savings accounts, ahead of the new tax year on 6 April
Make sure to check the underlying rate
Plum’s* boosted rate looks the most attractive for savers at 5.92 per cent, but plummets after three months to 3.54 per cent.
This means its average rate over 12 months works out as 4.14 per cent.
It’s also not flexible, meaning you can’t withdraw money and replace it without affecting your allowance, and you won’t get the bonus rate if you make more than three withdrawals or your balance drops below £100.
CMC Invest* was already a top Isa pick because of its high regular rate of 4.85 per cent and has now raised the stakes to offer 5.7 per cent, with a 0.85 per cent three month boost for new customers.
Earlier this week we crunched the numbers to reveal the real best short-term boost cash Isa rates, working out average rates over 12 months.
Using the same method for calculating the average – three months at the higher rate and nine months at the standard rate – those stashing their cash in a CMC Invest* Isa could enjoy 5.06 per cent interest over the whole year.
Chip* has a more attractive headline rate of 5.9 per cent but the firm’s regular 4.32 per cent rate puts its average lower at 4.72 per cent.
Trading 212* is still at 5.6 per cent for three months and then 4.5 per cent, which works out as 4.78 per cent average over 12 months.
All three of these Isas are flexible, which means you can withdraw money and pay it back in the same tax year without affecting your allowance.
They all let you make unlimited withdrawals without penalty, unlike some other providers that lower your interest rate if you take money out more than three times. You can open them with just £1.
It’s worth keeping in mind that all of these rates are variable, so there’s no guarantee you’ll receive the current advertised rates over a full year.
Will Isa providers boost rates further?
At the beginning of the week, Isa providers kept inching rates up in an effort to offer savers the most attractive headline number.
In response to CMC Invest’s leading headline rate, Chip then pushed its own boosted rate up to 5.9 per cent.
With just over 24 hours to go until the end of the tax year, CMC Invest could be the best option for cash savers who are hunting for top rates over the long-term, and are still undecided about where to put their money.
That’s because of the best-buy underlying 4.85 per cent rate savers should receive after the bonus period.
You can read more last minute tips on maximising your Isa or pension before the end of the tax year.
We also have a table of the best cash Isa rates to discover more deals and our regularly updated round-up tells you more about five of our favourite cash Isas.
