Moneybox has increased the interest rate on its Cash ISA to 5.09 percent AER, earning an “excellent” Moneyfactscompare rating.
ISA interest rates have been falling in recent weeks following the Bank of England’s decision to freeze the Base Rate at 5.25 percent for the second consecutive time. According to Moneyfacts’ data, the average easy access ISA rate today has dropped to 3.31 percent.
Commenting on app-based Moneybox’s deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Moneybox has increased the rate on its Cash ISA this week, which improves its overall position in the market when compared with similar variable Cash ISAs.
“The deal now pays a rate of 5.09 percent on the account’s anniversary and may be an attractive option for savers who want flexibility and instant access to their ISA.
“This account also includes a bonus of 0.94 percent for the first 12 months, which may also entice savers.”
However, Ms Eastell noted: “Investors must note that if they make more than three withdrawals per year the rate drops significantly to 0.75 percent, so careful planning may be sensible.
“Overall, this deal earns an Excellent Moneyfacts product rating.”
But while Moneybox may be offering a more attractive option, it isn’t quite topping the table yet. For those looking for even more flexibility, Metro Bank is offering a market-leading Annual Equivalent Rate (AER) of 5.11 percent.
There is no minimum investment amount, interest is paid annually, and withdrawals can be made at any time.
Not included in Chancellor Jeremy Hunt‘s Autumn Statement speech but buried in the online document are a few new changes to individual savings accounts (ISAs) due to be implemented in the next fiscal year.
Starting from next April, savers will be able to have more than one of the same type of ISA. They can also transfer part of their savings between different providers during the year, and there won’t be a need to reapply for an existing dormant account.
Additionally, the Chancellor has expanded the types of investments people can make. Innovative finance ISAs can now include long-term asset funds and open-ended property funds with extended notice periods. There’s also a possibility that “certain fractional shares” will be eligible for ISA investment, pending further discussions on how to implement this policy.
Meanwhile, the limits for different types of ISAs remain the same (£20,000 for cash and stocks and shares ISAs, £9,000 for a junior ISA, and £4,000 for a Lifetime ISA).
Tobias Gruber, founder and CEO of My Community Finance, said: “For savers who have grappled with rising inflation this year, it’s a real shame the Government have not increased the ISA limit. In times where every penny makes a difference, the move would have meant savers got to keep more of their hard-earned money.
“However, from April next year, individuals will have the flexibility to subscribe to multiple ISAs of the same type, providing a tailored approach to their savings strategy. Additionally, the removal of the requirement to reapply for dormant accounts streamlines the process, ensuring savers can effortlessly manage their existing accounts.”
He added: “To make the most of these changes, savers should proactively explore different savings options to find the best deals suited to their needs. Shopping around for competitive interest rates and exploring various savings options can maximise the benefits of your ISA limit. Informed choices about where to invest your savings can make a substantial difference in your long-term financial stability.”
Adam Thrower, head of savings at Shawbrook commented: “The Chancellor’s announcement to allow people to save into more than one Cash ISA a year should be welcomed.
“It will enable savers to truly benefit from the higher rates on offer. Currently, although savers can ask a provider to transfer old ISA deposits while keeping the tax-free status, it can feel like another barrier. Allowing them to take advantage of higher ISA rates across more than one option gives them the potential to make more from their money.”
