Best buy easy-access now pays 5% from app-only provider Moneybox

Best buy easy-access now pays 5% from app-only provider Moneybox

  • Moneybox now pays 5% on tax-free deposits of £500 or more 
  • Up to three withdrawals sllowed in a 12 month period from opening
  • Rate includes a bonus rate of 0.85% for the first 12 months 

Moneybox has boosted the rate on its cash Isa to 5 per cent, propelling it to the top of the best buy table.

This rate is available on deposits of £500 or more and it includes a bonus of 0.5 per cent for the first 12 months.

Moneybox launched its cash Isa at the beginning of September and originally payed a rate of 4.56 per cent.

It is the first time since 2008 that savers can get a cash Isa paying 5 per cent more. In the financial year 2008/09, the cash Isa limit was just £3,600 compared to £20,000 today.  

Launched to the top: Moneybox has upped the rate on its ‘easy-access’ cash Isa to 5%, propelling it to the top of the best buy tables

The cash Isa isn’t strictly easy-access, as it only allows three withdrawals within in each 12 month period from the date the account is opened.

If you make a fourth withdrawal, or if the amount in your account dips below £500, you will get a rate of just 0.75 per cent on your savings for the rest of that 12 month period or until your balances rises to £500.

The Moneybox Isa allows transfers in from other Isa providers. The Isa allowance for 2023-24 is £20,000.

The previous best buy cash Isa was offered by Coventry Building Society, paying 4.9 per cent. 

This account offers four penalty free withdrawals and you face a penalty of 50 days loss of interest if you make a fifth withdrawal.

The best no strings attached Isa comes from Shawbrook Bank, paying a rate of 4.81 per cent – its easy-access non tax-free equivalent pays 5.11 per cent.

See our round up of the best cash Isas here.

There has been a flurry of activity at the top of the best buy easy-access Isas recently and cash Isa rates have been creeping up towards easy-access levels. 

Last week Leeds Building Society upped the rate on its cash Isa to 4.8 per cent and Coventry Building Society swiftly followed suit. This has culminated in Moneybox’s move to boost its cash Isa rate to 5 per cent. 

The best easy-access account, offered by Coventry Building Society, now pays 5.2 per cent.

More savers than ever before have been funneling money into cash Isas due to rising interest rates.

Rising interest rates could result in savers with larger savings pots breaching their individual savings allowance, which is why Isas offer considerably more suitable longer-term tax-free benefits.

Now, all eyes will be on easy-access cash Isas to see if they will continue to rise to match the top easy-access savings accounts.

Andrew Hagger, a personal finance expert and founder of MoneyComms does not think this scenario is likely.

He says: ‘I don’t expect to see easy-access higher rates get much higher at present, although we may start to see some increased activity as we reach the end of the tax year, but that’s a few months off yet.’

To open a Moneybox account, you will need to download its app. Moneybox is part of the Financial Services Compensation Scheme, which protects savers to the tune of £85,000.