Earn 2% interest on cash balances between now and the end of May by opening an innovative finance individual savings account (Isa) with Abundance.
What’s the deal exactly?
Abundance is paying 2% AER on cash balances of up to £15,240 plus transfers from previous Isas held in its Isa until 31 May 2017. Returns are calculated daily from the date the account opens until the end of May. The interest will then be paid in a single transaction within three working days of 31 May 2017.
Why should I care?
With cash Isa rates low across the board the chance to earn higher returns – albeit for a short period – is not to be sniffed at. The best easy-access account, for example, comes from RCI Bank with a rate of 1.1% in comparison.
The 2016/17 tax year also ends on 5 April, so if you haven’t opened an account yet but are planning to do so, make sure to use your £15,240 allowance before the deadline.
What’s the catch?
Abundance’s Isa technically isn’t a cash Isa; it’s an innovative finance – otherwise known as a peer-to-peer (P2P) Isa.
And while it’s encouraging savers to effectively lend to its clients who need loans, Abundance has confirmed that savers who choose to keep their money in its Isa held in cash, won’t see it lent out to businesses as is traditional with peer-to-peer investment.
This means your cash balance is protected by the Financial Services Compensation Scheme up to a value of £85,000. However, if you do go on to lend your cash then your money isn’t protected.
The deal only runs until the end of May, after that point your balance won’t earn any interest. You’ll have to either invest your cash with Abundance or switch elsewhere.
Also beware that if you’ve already subscribed to an Isa this year you won’t be able to open another one.
What other options do I have?
See Moneywise’s top savings and Isa accounts picks this week for further cash options.
If you’re interested in stocks and shares Isas, see what funds consumers have been putting their money in this tax year.
Other peer-to-peer providers have also recently launched innovative finance Isas with expected returns of up to 6%.
Where can I find out more?
Full details of the product are available on the Abundance website.