easyMoney explains the best IFISA account rates vs the best Cash ISA account rates
This is a financial promotion and is intended to provide information, not investment advice.
easyMoney knows that many of our investors choose to keep money in a range of ISA products, including Cash ISAs, Stocks & Shares ISAs and Innovative Finance ISAs (IFISAs).
Rates change regularly so it is important to shop around before making any new investment decision. Unlike Cash ISAs, IFISAs do not have Financial Services Compensation Scheme (FSCS) protection but they do offer the potential for much higher tax-free returns. So what is the difference? And what are the ISA best rates for investors and savers in the UK right now?
Best Innovative Finance ISAs
There are only a few dozen registered IFISA managers in the UK, and they all offer different account options with a variety of different terms and conditions.
easyMoney’s award-winning IFISA is available on all of our accounts, at rates varying from 5.4% to 10%, depending on the type of account opened and subject to terms and conditions.
IFISA returns tend to be higher than Cash ISAs but the risk is also higher. With peer-to-peer investing, the key risk is the possibility of the loss of capital due to a borrower default. easyMoney works to minimise this risk by taking a very conservative approach to lending and carrying out strict due diligence on every loan and every borrower. While past performance is no guarantee of future success, easyMoney has maintained a zero-capital loss rate to investors since inception, as a result of our careful risk management.
As with the Cash ISA, up to £20,000 can be added to an IFISA account each year, and all returns are protected from taxation. However, unlike the Cash ISA, IFISAs are not covered under the FSCS.
Best Cash ISAs
The best Cash ISA account rates are usually available to savers who are prepared to lock their money away for a certain amount of time. For example, Atom Bank is currently offering a one-year fixed saver Cash ISA account with an interest rate of 4.4%[1].
Some Cash ISA providers also offer additional incentives for new account holders. For example, Trading 212 is offering a 3.85% variable rate Cash ISA with an additional 0.66% bonus for new account holders for the first year[2]. This brings the Trading 212 Cash ISA interest rate to 4.51%, but for one year only.
If you want to be able to withdraw from your Cash ISA savings account, an easy access option may be the best choice. Chase and Revolut are both advertising easy-access Cash ISA accounts at 4.5% at the moment, although both of these rates have certain conditions attached. Other flexible Cash ISA account rates are being offered at between 3% and 4.2% by a variety of building societies and banks[3].
The best Cash ISA rate will vary depending on a number of factors, such as the base rate, the additional benefits offered, and whether or not you are an existing customer of the ISA provider. You can save up to £20,000 per year in Cash ISAs, completely tax free, and all Cash ISAs are protected by the FSCS which covers any losses up to the value of £85,000.
Capital is at risk. Past performance is no guarantee for future results.
Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future.