Moneybox increased the interest rate on its cash ISA to five percent and earned an “excellent” rating from Moneyfacts.
ISAs are becoming more popular amongst Britons as an effective tax wrapper while personal savings allowances remain frozen and interest rates climb.
With an ISA, people can save up to £20,000 a year tax-free, and the interest rates on these accounts are growing increasingly competitive.
Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Moneybox increased the rate on its Cash ISA [last] week, improving its position in the market and its spot in our top rate tables for variable Cash ISAs.
“The deal pays a rate of five percent, payable on its anniversary and may appeal to savers who want flexibility and instant access to their ISA.”
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The account includes a bonus of 0.85 percent for the first 12 months, which may appeal to savers.
However, Ms Eastell added: “Investors must note that if they make more than three withdrawals per annum the rate drops significantly to 0.75 percent. Overall, this deal earns an Excellent Moneyfacts product rating.”
The account can be opened and managed via the Moneybox app with a minimum deposit of £500. Savers must be aged 18 and over and a UK resident to apply.
But while Moneybox may be offering the leading rate for accessible ISAs, the competition isn’t too far behind.
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For savers who need a little more flexibility than three withdrawals, Shawbrook Bank’s Easy Access Cash ISA (Issue 25) falls just behind with an AER of 4.93 percent.
The account can be opened online by UK residents aged over 18 with a minimum deposit of £1,000.
Interest is calculated daily and can be paid monthly or annually and withdrawals are permitted at any time without penalty, as long as it’s above £500.
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Placing just behind is Virgin Money’s Defined Access Cash E-ISA (Issue 22) with an AER of 4.91 percent.
The account can be opened online with a much smaller minimum deposit of £1 by savers aged 16 or over.
Savers can opt for interest to be paid monthly or annually, however, similar to Moneybox’s account, there are restrictions on withdrawals. Three withdrawals are permitted without penalty but if any more are made, the interest rate will drop to two percent.
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