Plum offers top 5.17% cash ISA on the market – but do its restrictions make it worthwhile?

The savings app is now the best cash ISA on the market. But with a few caveats on the account, how good is Plum’s cash ISA?

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Savings app Plum has bumped up its cash ISA offering from 5.15% to 5.17% after launching just under a month ago – but there are some caveats to bag the headline rate. 

Cash ISAs are looking attractive for a couple of reasons at the start of the new tax year- the first being, ISA rates reaching a 10-year high after years of not ranking up to the best savings accounts on the market. 

Plus, due to frozen income tax thresholds dragging more people into paying higher taxes, the ISA tax wrapper is looking more rewarding. According to the Office for Budget Responsibility (OBR), almost an extra four million people are set to pay income tax, with three million being pulled into the higher rate tax bracket. 

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With interest rates frozen for another month and predicted to fall this spring, it’s a golden opportunity for savers to snap up the best deals before a base rate drop feeds into the cash ISA market, as Rachel Springall, finance expert at Moneyfacts warns: “As we have seen in the past, rate cuts typically get passed on quickly compared to rises.”

Find out how the cash ISA works and if you’re eligible for the 5.17% rate. 

How does the Plum ISA work? 

Plum is offering 5.17% AER (Variable) on its new cash ISA which includes a bonus rate of 0.88% for the first 12 months. 

So while the bonus rate is fixed for 12 months, the headline rate of 4.29% is variable, it could change at any time depending on changes in the wider market. After a year the rate will revert to 4.29%, with no bonus. 

The account requires a minimum deposit of £100, but if your balance falls below this sum, the rate you earn also drops to 3% AER. 

You also risk losing the headline rate depending on how many withdrawals you make. Traditionally, cash ISAs usually allow easy access to your cash and flexibility. However, the Plum ISA only permits up to three withdrawals per year. 

On your fourth withdrawal, the rate you earn also plummets to 3% AER, and this rate stays put for 12 months from the date you opened the account. After a year, the rate you earn resets to whatever the variable rate is at that given time, without the bonus rate. 

If you already hold a cash ISA with another provider and want to transfer your funds to the Plum ISA, you can do so- but this comes at a cost. Any ISAs transferred into the Plum ISA won’t take advantage of the headline rate- instead you will earn 4.29% AER. 

As per the ISA rules, you can save up to £20,000 across all your ISAs in one tax year. So, don’t forget to take into account any allowance you have already used up in a stocks and shares ISA for example. 

You can open and manage the ISA on the Plum app. 

Is the Plum cash ISA any good? 

Whilst Plum leads the cash ISA market with its top 5.17% rate, there are a few caveats to consider.  

The account imposes some restrictions on savers which is becoming increasingly common on easy-access accounts. The first noticeable one is only allowing up to three withdrawals a year. So if you are looking for full flexibility with your ISA, this might not rank up to be your best option. 

And while transfer ins seems like good news at face value, the rate you earn drops below the 5% mark, to a mere 4.29% AER. 

But Plum isn’t the only ISA provider to inflict restrictions on its account. Here’s how the cash ISA compares to the rest of the market. 

Swipe to scroll horizontally
ProviderRate AERBonus rate included? Flexibility Transfers
Plum5.17%Yes. 0.88% for 12 monthsMaximum 3 withdrawals permitted, after which rate drops to 3%Yes, but accounts transferred earn a lower rate of 4.29%.
Moneybox5.16%Yes. 0.91% for 12 monthsMaximum 3 withdrawals permittedYes- doesn’t affect the rate earned.
Chip5.1%NoYesYes- doesn’t affect the rate earned.

As we can see, Moneybox also comes with its fair share of restrictions on withdrawals and a bonus rate for 12 months. Whereas Chip, which comes in third on the list acts as a true easy-access ISA. Plus, it still offers beyond the 5% mark. 

Springall says it's up to savers to check these ISA accounts thoroughly when shopping around the best account, “as some of the best rates are offered on accounts that carry withdrawal restrictions, include a bonus, or are linked to another account.” 

Are cash ISAs worth it? 

That said, the restrictions shouldn’t put you off opting for a cash ISA, as long as the ISA suits your needs, even if it is with a restriction or two. 

With the base rate frozen at 5.25% for the fifth time and inflation slowing to 3.4% in February, savers can expect desirable rates in the short term – making the tax-free wrapper even more attractive as the interest earned on your cash could exceed your Personal Savings Allowance, which could result in paying more tax on your savings if you were to save in a traditional saver. 

If you have cash that you don’t mind fixing, fixed ISAs are offering a lower rate than easy-access ISAs, but fixing gives you a guaranteed rate during the term you fix for. Currently, the top one-year fixed ISA is 5.05% by Paragon Bank.  

Mark Hicks, head of Active Savings at Hargreaves Lansdown says with the news of another month of frozen interest rates, “It’s a sensible time to fix either savings or cash ISAs too, because if the Bank of England does cut as expected in the summer, you’ll have locked in a decent rate.”

Vaishali Varu
Staff Writer

Vaishali has a background in personal finance and a passion for helping people manage their finances. As a staff writer for MoneyWeek, Vaishali covers the latest news, trends and insights on property, savings and ISAs.


She also has bylines for the U.S. personal finance site Kiplinger.com and Ideal Home, GoodTo, inews, The Week and the Leicester Mercury


Before joining MoneyWeek, Vaishali worked in marketing and copywriting for small businesses. Away from her desk, Vaishali likes to travel, socialise and cook homely favourites