SAVERS are being lured into opening “top”; savings accounts that could see them end up with low interest rates.
including Plum, Trading212 and Moneybox are offering ‘best-buy’ Isas with rates of up to 5.68%.
These rates are designed to appear at the top of and attract customers who want to open an Isa now that the new financial year has begun.
But these accounts include a bonus which only lasts for three months, after which the interest rate plummets.
For example, the Plum Cash Isa has topped tables with its interest rate of 5.68%.
But the rate includes a bonus of 2.14% for three months, after which it falls to 3.54%.
If you opened this account with £5,000 you would earn £71.01 in interest in the first three months.
But in the following nine months you would earn just £132.75, giving you a total of £203.76.
This is £80.24 less than if the rate remained at 5.68% for the whole year.
The boosted rate is also only available to new savers, so loyal customers will miss out on it.
In comparison, Tembo is offering the highest paying cash Isa without a boosted rate.
It has an of 4.8%, which means you would earn £240 over the course of a year.
This is £36.24 more than if you opened the Plum Cash Isa with the boosted rate.
Rachel Springall, savings expert at MoneyfactsCompare, said: ““Savers need to watch out for upfront bonuses as some of the best cash ISAs on the market have a very short period of just three months on when the bonus applies.
“These are tantalising but its vital savers understand the rate will change once the bonus expires, so its up to them to review and switch.”
Which other accounts are offering boosted rates?
Moneybox is also offering a cash Isa with an introductory rate.
The account pays 5.67% for the first three months before the rate drops to 4.2%.
You would earn £228.39 after one year.
Trading212 will pay you 5.46% for the first three months, after which the rate falls to 4.5%.
Over the course of a year you would earn £237 in interest.
Meanwhile, CMC Invest will give you 5.7% on its variable .
But the rate drops to 4.85% after three months, which means you would earn £253.14 in interest annually.
This means only the CMC Invest account would give you a better return than the best cash Isa without a bonus.
How do I get the best rate?
When looking for an Isa it is important to compare rates to make sure you are getting the best deal.
You can use comparison websites such as MoneyfactsCompare or The Private Office to check the rates on offer at several banks at once.
When you find a rate you like, read the small print to avoid being caught out.
It should tell you if the account includes a bonus and what the interest rate will be once the bonus has ended.
Rachel Springall said: “Comparing deals carefully and making a calendar note of any bonus is essential to not be left disappointed.”
Some accounts will also give you a lower if you make more than a certain number of withdrawals.
For example, the rate on the Moneybox Cash Isa falls from 5.67% to 0.75% if you make four or more withdrawals within one year.
If your account balance falls below a certain amount then your rate may also drop.
Moneybox will pay you just 0.75% on your savings if your balance falls below £500.
The Plum rate will also fall from 5.68% to 2.5% if your balance drops below £100 or after you make four withdrawals.
Under rules set out by industry regulator The Financial Conduct Authority (FCA), firms have a duty to make sure that their rates are clear and not misleading.
rules warn that firms need to communicate in a way that helps savers to make effective, timely and well informed decisions.
For instance, this should include making the length of a bonus rate period clear.
An FCA spokesperson said: ‘People should shop around for the best savings rates, and introductory offers can encourage them to do so.
“We expect firms to make clear how offers work so that savers have the right information to make informed decisions.”;
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