Cash Isa battle cools as providers drop rates: Which are the REAL best buys now?
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A heated battle to give savers the best headline cash Isa rate is winding down, with only two providers still offering boosted three-month bonuses – and one will be lowering its underlying rate soon.
Recent Bank of England data revealed savers stashed a bumper £14billion into cash Isas in April – the highest amount paid into Isas in a given month since the account launched in 1999.
This was fuelled by savers shifting money from taxable saving accounts and rumours swirling that the Chancellor is considering cutting the cash Isa allowance.
No doubt savers were also buoyed by attractive interest rates on offer from a happy few Isa providers battling at the top of our best-buy cash Isa table.
These providers competed for savers' cash at the end of the tax year by offering enticing three-month boosts to their underlying rates, but most have now reverted to 12-month boosts instead.
Cash Isa battle cools: Boosts still available but it can be tricky to know which are best buys
One provider – CMC Invest* – has held out with a plus 5 per cent headline rate on its easy-access deal, following the base rate cut to 4.25 per cent.
Even though interest rates on savings accounts aren't directly tied to the base rate of interest, they often follow it, and many Isa providers such as Chip* scrambled to drop rates following the Bank of England's announcement on 8 May.
CMC Invest held out for a while, but the revert rate on its cash Isa will be falling to 4.59 per cent on 16 June, which is still higher than underlying rates from other providers.
It's currently still offering a three-month boost, which makes the headline rate 5.44 per cent.
Moneybox is offering a headline rate of 5.46 per cent, which includes a fixed three-month boost of 1.51 per cent.
Other providers are offering boosts that last for 12 months. We've crunched the numbers to work out how these best-buy cash Isa providers compare.
For the three-month boosts, we've calculated an average 12-month rate by taking three months at the higher rate and nine months at the standard rate. The actual rate savers receive will be slightly different due to interest being accrued daily or monthly:
| Chip | CMC Invest | Moneybox | Plum | Trading 212 | ||
|---|---|---|---|---|---|---|
| Boosted rate | 4.82% (12 months) | 5.44% (three months) | 5.46% (three months) | 4.85% (12 months) | 4.81% (12 months) | |
| Revert rate | 4.06% | 4.59% | 3.95% | 3.29% | 4.1% | |
| Average rate over 12 months | 4.82% | 4.8% | 4.33% | 4.85% | 4.81% |
Boosts mean cash Isa savers should still be able to beat the base rate for the foreseeable future.
But in terms of real best-buy rates over 12 months, other providers now just about edge CMC Invest* and comfortably beat Moneybox, with Plum* taking number one spot.
But, in our view, cash Isas from CMC Invest* and Trading 212* are the real best buys currently.
The difference in rates over 12 months is negligible, both have a higher revert rate than others, and each offers:
- A flexible Isa: You can withdraw money and replace it in the same year without affecting your allowance – Moneybox and Plum's Isas aren't flexible.
- Transfers in from other providers: The boosted rate is available on transfers in – unlike Plum's Isa, which only offers the underlying rate on transfers.
- Unlimited withdrawals without penalty: Moneybox and Plum drop your rate after three withdrawals.
Keep in mind that while boosts are fixed, underlying rates are variable, so savers may not receive the above rates over the whole 12 months. While we like the underlying rates on cash Isas from CMC Invest and Trading 212 currently, they can shift downward.
Read our regularly updated round-up of our five best cash Isa providers for more deals, including the best fixed rates and our pick of the best Lifetime Isa.
You can also look at our best cash Isa rates table for the latest top picks.
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