Cash Isa race heats up as rates climb as high as 4.61%: Here are the best deals

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It’s game for savers as a new battle to offer the best-buy cash Isa rate kicks off ahead of tax-year end.

Etoro* has hiked its rate from 4.44 per cent to 4.61 per cent, which includes a 1.1 per cent boost for 12 months.

Other providers bumping rates include the likes of Hargreaves Lansdown*, Trading 212* and even Tesco Bank, which this week announced a small rate lift from 3.91 per cent to 3.97 per cent on its easy-access Isa.

Meanwhile, upstart savings and investing platform Prosper* earlier this month launched an Isa at 4.5 per cent, including a 1.72 per cent boost for 12 months.

Savers keen to earn the highest amount of tax-free interest on their cash – and who haven’t used their Isa allowance already – now have plenty of choice over where to stash their cash.

Keep in mind that easy-access rates are variable – and even if a 12-month boost is fixed, the underlying rate can change. We examine the deals below. 

Etoro – 4.61 per cent (includes 1.1 per cent boost for 12 months)*

You might know Etoro* mainly as an investment platform, but it also has a cash Isa provided in partnership with Moneyfarm.

The high interest rate has kept it as a best-buy over the last few months, and a recent leap to 4.61 per cent means it retains that status – with a few important caveats.

Firstly, as with most boosted rates, it’s for new customers only.

Etoro also punishes you for making more than three withdrawals over the 12 months (or when your balance drops below £500) by lowering your rate to 3.51 per cent.

It has a relatively high minimum deposit of £500 and a high transfer requirement of £15,000.

And finally, your cash is held in a qualifying money market fund (QMMF), which is a very low-risk investment that’s viewed as ‘cash-like’ from a regulatory perspective.

Your money still has FSCS protection, but at the lower £85,000 limit for investments. Importantly this doesn’t cover you if investments fall in value because of normal shifts in the market, but as mentioned, QMMFs are low-risk and linked to interest rates.

The good news is it’s a flexible Isa, which means you can withdraw money and replace it within the same tax year without affecting your allowance. Etoro pays the boosted part of your rate after the year.

> Read our review of Etoro as an investment platform 

Prosper – 4.5 per cent (includes 1.72 per cent boost for 12 months)*

This new account is a good option if you haven’t used all your Isa allowance yet, because it requires a high minimum deposit of £10,000 – and transfers aren’t supported yet.

It’s a flexible Isa and Prosper* won’t punish you for taking out money by reducing your rate. The underlying rate is relatively low, tracking the Bank of England base rate minus 1 per cent gross.

Prosper only pays the boosted element to your bank account after the 12 months is up.

Prosper is a saving and investing platform that also offers stocks and shares Isas and self-invested personal pensions (Sipps) with zero account fees.

> Read our review of Prosper as an investment platform 

Trading 212 – 4.43 per cent (includes 0.83 per cent boost for 12 months)*

Trading 212* has consistently offered a top rate on its cash Isa, and we like that the underlying rate is relatively high too – tracking the base rate minus 0.15 per cent.

This means there shouldn’t be a huge cliff edge at the end of the 12-month boost, provided the platform doesn’t change the level at which it tracks the base rate.

Unlike the above platforms, Trading 212 only requires a £1 minimum deposit. The Isa is flexible and there are no penalties for withdrawing your money.

It accepts transfers, but the boosted rate only applies to contributions made this tax year. Both the boosted and the underlying interest rates accrue daily and are paid monthly.

> Read our review of Trading 212 as an investment platform 

Plum – 4.42 per cent (includes a 1.88 per cent boost for 12 months)*

Plum* is a good option if you’ve exhausted boosted rates elsewhere but beware of the low underlying rate.

The provider removed withdrawal penalties last year after This is Money consistently said that they drag its account down, so there’s now no change to your rate after three withdrawals.

But keep in mind it’s not a flexible Isa, so withdrawals will hit your Isa allowance. It’s positive that you only need £1 to open the account. You can also transfer an Isa, but it will only receive a lower 4 per cent rate (which includes a 1.46 per cent boost).

The boosted part of the rate accrues daily and is paid at the end of the 12 months.

Hargreaves Lansdown – 4.3 per cent*

Hargreaves Lansdown* is calling this a ‘market-leading’ rate, with the caveat that it’s only a best-buy when you take accounts with 12-month boosted rates out of the picture.

If you’d prefer an account that’s more straightforward, this cash Isa is well worth a look. It’s the investment platform’s own product, provided in partnership with Shawbrook Bank, and you can open it with just £1.

Keep in mind that it’s not a flexible Isa and that there’s a quirk to transfers that means you need to transfer to a Hargreaves Lansdown stocks and shares Isa and then shift money to the cash Isa.

The product sits on Hargreaves Lansdown’s savings platform, which means you can compare rates from multiple providers and switch money between them all from one account.

> Read our review of Hargreaves Lansdown as an investment platform