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Investing platform XTB XTB*has launched a cash Isa offering a huge 6 per cent interest, but it includes a 2 per cent boost that only lasts three months.
This brings the real rate over 12 months down to 4.5 per cent, which still compares well with other rates on the market.
We’ve crunched the numbers by working out the average rate over a year, taking three months at 6 per cent and nine months at 4 per cent.
XTB isn’t as well-known in the UK as rival platforms Etoro, IG and Trading 212. It was founded in 2004 in Poland and now operates globally.
However, you might recognise its adverts featuring former Manchester United and AC Milan star Zlatan Ibrahimović.
Keep in mind that it offers risky CFD (contract for difference) trading, as do the rivals mentioned.
CFDs are complex financial instruments that are best avoided. XTB itself says that 71 per cent of its customers lose money when trading CFDs on the platform.
XTB is worth a look if you’re still thinking about ways to maximise your Isa allowance before the end of the tax year. But there are further caveats, which we run through below.
> Find out more about XTB’s cash Isa and open an account*
Retired football star Zlatan Ibrahimović is XTB’s current brand ambassador
What do we like about the XTB cash Isa?
The new cash Isa from XTB has a few features we like.
It’s a flexible Isa, so you can withdraw money and replace it in the same tax year without reducing your £20,000 allowance.
XTB* won’t punish you for withdrawing money by dropping your rate, either.
It asks for a relatively low minimum deposit of £10. This is higher than the minimum deposit of £1 needed at Trading 212* and Plum*, but far lower than the minimum £500 that Etoro and Moneybox require.
And most importantly, the real rate works out at 4.5 per cent over 12 months. Only Etoro* beats this at 4.59 per cent (including a 1 per cent boost for 12 months), while Prosper* matches it at 4.5 per cent (including a 1.72 per cent boost for 12 months).
While the boosted part of a rate is usually fixed, underlying rates are variable.
You must join by 30 April to take up the 2 per cent boost, which lasts 90 days from the date you open your account.
Be sure to check out the terms and conditions of the deal before going ahead and make sure the account suits your needs.
Read more about how a cash Isa battle has kicked off ahead of tax-year end.
And what could be better?
The big one is that XTB doesn’t accept transfers directly to its cash Isa, although the provider expects to introduce this ability soon.
If you want to transfer out of another Isa, you can only shift it to XTB’s stocks and shares Isa. This account still offers 4 per cent interest on uninvested cash but the 2 per cent boost isn’t available.
Moving funds from an XTB stocks and shares Isa to its cash Isa will reduce your allowance, because you must switch it to a regular XTB savings account first.
Your money is FSCS protected up to £120,000, but XTB holds it across several partner banks.
Keep in mind that the protection applies to all the cash you hold with a bank, not per account – so you should check which banks XTB partners with.
I also found it convoluted to add cash to an account, because you must complete a bank transfer manually on your end.
The money goes into XTB’s general account first, then you need to shift it over to the Isa.
> Find out more about XTB’s cash Isa*
SAVE MONEY, MAKE MONEY
4.54% cash Isa
4.54% cash Isa
Trading 212: 0.94% fixed 12-month bonus
£100 cashback
£100 cashback
Transfer or fund at least £10,000 with Prosper
4.61% cash Isa
4.61% cash Isa
Includes 12-month boost for new customers
£3,000 cashback
£3,000 cashback
1% cashback up to £3,000 when transferring
Earn up to £3,000
Earn up to £3,000
£100-£3,000 cashback for joining
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