Plum launches market-leading easy access ISA

Plum’s newly launched Cash ISA pays a market-leading rate of 5.15% AER on balances over £100.

As the end of the tax-year approaches, Plum has launched a new cash ISA that pays a market-leading rate of 5.15% AER.

Plum, a mobile money app, moves ahead of digital providers Moneybox and Chip that previously offered the leading easy access ISA rates at 5.11% AER and 5.10% AER respectively.

“We believe in rewarding savers, and that’s why we’re really excited to be launching our market-leading Cash ISA. Cash ISAs aren't a new concept, but we’ve reinvented it by doing it the smart way, so savers can also benefit from Plum’s automation,” commented Plum’s CEO and founder Victor Trokoudes.

The finer details

To receive the rate of 5.15% AER, you need to have at least £100 saved in Plum’s Cash ISA and not make any more than three withdrawals from the account in a year. If the balance drops below £100 or you make more than three withdrawals in one year, a lower rate of 3.00% AER will apply.

Savers should also bear in mind that the headline rate of 5.15% AER includes a 12-month bonus of 0.86% AER.

This bonus rate won’t be available if you transfer your existing cash ISA to Plum, which means you would only be able to receive a maximum rate of 4.29% AER on your account.

As with other ISAs, any interest you earn from Plum’s Cash ISA is exempt from tax.

Choosing an ISA

Plum’s Cash ISA tops our easy access ISA chart and pays a considerably higher rate than the average easy access ISA rate, which rose to 3.32% in March.

“It’s great to see more activity within the cash ISA market, and the new deal from Plum pays a very attractive rate against its competition. Savers will need to make a note of the bonus that is applied and compare the offer to other deals in the market carefully,” explained Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

Because the rate is variable, Plum could lower the rate on its Cash ISA with little warning.

If you want a guaranteed return on your money, you’ll need to look at fixed-rate ISAs. Virgin Money pays the leading rate on one-year ISAs at 5.25% AER, but this account is only available to new and existing Virgin Money current account customers from 4 December 2019, or existing customers who originally opened a Clydesdale Bank, Yorkshire Bank or B current account.

Alternatively, OakNorth Bank and Kent Reliance offer the next highest rate for one-year ISAs at 5.07% AER.

While the rate on these fixed ISAs is lower than that offered by Plum’s Cash ISA, and you won’t have easy access to your money, the rate is guaranteed for the whole term.

Whether you prefer a variable or fixed ISA, these accounts allow you to earn tax-free interest on your savings. You can save up to £20,000 in ISAs in each tax-year and, with the end of the current tax-year just a couple of weeks away, anyone wanting to take advantage of their tax-free ISA allowance will need to act quickly.