Investing platform offers temporary 8.5% annual interest rate on cash balances this month
Investing and trading platform IG is offering a temporary cash interest rate of 8.5 per cent AER (annual equivalent rate) - twice the current Bank of England base rate.
The boosted rate will be available to people who open a stocks and shares ISA, SIPP (self-invested personal pension) or a General Investment Account (GIA) and make an initial investment before May 31.
Once they have made an initial investment, any additional money that qualifying customers have deposited and are holding in cash on the account would earn 8.5 per cent interest until August 31, provided they keep any investment position open for this period. After this date, interest reverts to IG's standard 4.25 per cent rate.
IG does not offer a dedicated cash savings account, so the rate would apply to uninvested cash in its ISAs, SIPPs or GIAs. IG pays interest on cash balances up to £100,000.
Michael Healy, UK managing director of IG, said: 'Many investors are sitting on the sidelines right now as they wait for market clarity - this offer gives them a place to park their money and still earn a serious return.'
Existing account holders could also be eligible for the offer, providing they have not yet placed their first trade and do so by May 31.
The announcement was made the day after the Bank of England base rate was reduced from 4.5 per cent to 4.25 per cent, prompting suggestions that savings providers may cut their return rates.
Global economic and political uncertainties, including over US tariffs, have prompted market volatility in recent weeks.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: 'The high interest rate looks enticing, and it is positive to see appetite to draw in savers who are looking to make their money work harder for them. However, it is essential savers carefully check the terms and conditions of the account before they invest.
'Savers need to understand that the interest rate is applied to money sitting in a specific type of account, which should entice investors who are waiting for the market storm to calm. Offering a high interest rate is a great way to entice the more risk-averse saver, and it gives them an opportunity to consider the longer-term benefits of investing in the stock market once they feel comfortable to do so.
'In the meantime, they can earn an attractive rate on their hard-earned cash, but they need to make sure they review it once the offer expires. Investing puts any capital at risk, so this option will not be suitable for every saver.'
In another boost to savings rates, West Brom Building Society announced a rate increase on its Four Access Saver account on Friday. The interest rate has been increased from 4.40 per cent to 4.65 per cent AER (variable).
The improved rate will apply to all new and existing customers holding issues one and two of the product, the Society said. Applications can be made online. Account holders can make up to four withdrawals per year.
Sophie Dwyer, product manager at West Brom Building Society, said: 'As a mutual, our customers are at the heart of everything we do.'
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