Fintech firm Plum has increased the rate on its cash ISA to a market-leading 4.42% AER, but the offer is only available to new customers and includes a 12-month bonus. The rate, which includes a 1.88% AER bonus for the first 12 months, has been described as 'excellent' by Moneyfacts, though analysts caution savers to review the deal when the bonus period ends.
Key Details of the Plum Cash ISA
The account can be opened with as little as £1, and savers can deposit up to the annual ISA allowance of £20,000 for the current tax year. However, it is not possible to transfer existing ISAs into the account, and the account can only be managed via Plum's mobile app. Savers can make unlimited withdrawals without penalty, but no interest is paid for any month in which the account is closed or funds are transferred out.
Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, said: 'This account may be best suited for savers who may need to dip into their deposits frequently as they can make unlimited withdrawals without penalty. However, no interest is paid for the month if savers close the account or transfer out.' She added that the 12-month bonus term makes it 'crucial' for savers to review their deal when it expires.
Comparison with Other Market Offers
Moneyfacts has placed Plum's cash ISA at the top of its 'Best Buy' list, earning an 'excellent' product rating. Meanwhile, Martin Lewis's MoneySavingExpert identifies Chip's easy-access cash ISA as its top rate for transfers, paying 4.42% AER, which is made up of 3.75% variable and a 0.67% bonus for new customers for 12 months. MoneySavingExpert's latest cash ISA ranking, published on Friday, June 19, puts Trading 212's offer at the top, paying 4.51% to new customers who apply via the website, with unlimited withdrawals but no transfers. MSE cautions that Trading 212's cash ISA is 'likely a loss-leader' designed to attract new customers who may go on to open investment products, and warns savers not to invest unless risks are fully understood.
Impact and Advice for Savers
Plum's offer is competitive but comes with restrictions that may not suit all savers. The inability to transfer existing ISAs and the app-only management could be drawbacks for some. Financial experts recommend that savers compare rates and terms carefully, especially considering the bonus expiry, and consider whether the account fits their long-term savings strategy.
