Beat the base rate cut: Secure a cash Isa savings BONUS before it's too late
The Bank of England voted to reduce base rate yesterday but cash Isa bonuses are still available from two top providers - for now.
When you open one of these products the bonus is locked-in for three months, meaning you can secure a higher level of interest until August.
Providers take changes in the base rate into account when deciding on the interest to offer savers. And with the base rate falling by 0.25 percentage points to 4.25 per cent, it's likely that Isa providers will soon start cutting rates on their savings products.
The pace of base rate cuts is only expected to ramp up. Two members of the Bank of England's Monetary Policy Committee voted for a larger 0.5 percentage point drop.
Chip is one provider that's already announced a rate reduction across its savings accounts.
CMC Invest* and Moneybox are both offering three-month bonuses on cash Isas. Even though these providers may cut the underlying rates, the bonus rates are fixed for three months.
But you should act quickly if you want to open one of these accounts – these providers' terms and conditions mean they can remove or reduce the bonus rate for new customers at any time. Here's how the accounts compare.
The top paying Isa rivals
There are currently two accounts topping the cash Isa tables with bonus rates but in This is Money's view, one is considerably better than the other.
CMC Invest* Isa – flexibility and a top underlying rate
Bonus rate: 0.85%
Current underlying rate: 4.85%
Current boosted rate: 5.7%
Open with: £1
Although the boosted rate on CMC Invest's Isa* is just beaten by Moneybox, it's still our top pick for savers.
This is because the underlying rate is 0.65 per cent higher than Moneybox at the moment, so it reverts to a higher rate, plus the account offers much more freedom around withdrawing money.
It is a flexible Isa, which means you can withdraw money and replace it in the same tax year without affecting your allowance.
There aren't any restrictions around withdrawals either – you won't be penalised for taking money out of your account.
Moneybox Isa – higher rate but restricted withdrawals
Bonus rate: 1.51%
Current underlying rate: 4.2%
Current boosted rate: 5.71%
Open with: £500
This headline Isa rate from Moneybox edges CMC Invest but the underlying rate is lower.
You need more cash to open an account plus it's not a flexible Isa, meaning you'll use up your allowance when you replace money you've withdrawn.
Moneybox penalises savers who make more than three withdrawals a year by reducing the rate to 0.75 per cent. This rate also applies when the balance falls below £500.
But there can be a benefit to restrictions like this: they provide an incentive to keep your cash locked away if you think you'll otherwise be tempted to make withdrawals.
If you're looking for more top cash Isa picks, we have a regularly updated round-up that reveals our five of our favourites.
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