Martin Lewis has highlighted the top-paying cash ISA offering a “much better deal” than has been available with other accounts recently.
Speaking on his BBC podcast this week, he first explained the perks of the easy access cash ISA with Trading 212, which has a market-leading rate of 5.2 percent.
He said an unusual feature of the account is it is current paying above the rate on offer with normal savings accounts.
ISAs have the advantage of being tax-free so their top rates tend to be lower than those with savings accounts, which can be taxed on the interest earned and on income derived from the account.
Mr Lewis said: “Normally only those people who pay tax on savings would be looking at cash ISAs because the rates aren’t good.
“But right now the top easy access cash ISA is paying more than the top easy access normal savings.”
Mr Lewis pointed out that Trading 212 is a US shares trading firm that has launched into the UK market.
He thinks the trading platform has launched the savings account as a “loss leader to build its market share”.
He warned savers that if the trading firm tries to cross-sell them its other products, to make sure they have researched how trading and investing works before signing up.
But the account is FSCS-protected ( Financial Services Compensation Scheme) meaning customer deposits are protected up to £85,000.
Mr Lewis said: “The cash ISA is fully UK savings protected but because Trading 212 isn’t a bank in its own right, it holds the money separately in a client money account via UK arms of Barclays, JP Morgan and/or NatWest.
“It’s their savings safety protection, the FSCS compensation scheme protection up to £85,000 per person that you’re protected by.”
Interest is paid daily and you can make withdrawals at any time without impacting your interest rate.
Mr Lewis also pointed to app-only Chase which is currently offering 5.1 percent with its Chase Saver.
You need to open a current account with Chase to then launch a Chase Saver.
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