New cash ISAs offer short-term bonuses, rates drop afterward

There is an urgent warning for people using cash ISAs as the tax year end approaches. You have until April 5 to use your £20,000 allowance. Many new accounts are offering higher rates, but many come with a bonus that only lasts three months. These bonuses can make the rates appear more attractive at first. For example, Trading 212 and Moneybox offer rates of 5.28% and 5.26%, respectively. However, after the three-month period, these rates will drop significantly. Trading 212's rate will fall to 4.5%, while Chip will drop to 4.32%. In contrast, some accounts provide stable rates without short-term bonuses. Tembo, for example, offers 4.8% with no bonus. Even though the current rates seem better than a year ago, it is crucial to look at the long-term implications of these accounts. Some banks still offer poor rates for easy-access accounts. The best rates available now do not compare well to those offered by newer app-based accounts. It is essential for savers to stay informed and consider switching accounts to get the best returns on their savings. Overall, while there are high rates available, be cautious. Bonuses might tempt you, but they could leave you disappointed after just three months.