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Prosper* has boosted the rate on a one-year fixed savings account from Al-Rayan Bank to 4.85 per cent.
This is a 0.25 per cent lift from 4.6 per cent but only new customers to the savings and investing platform are eligible for the bonus rate.
The boosted rate makes this a top one-year fix. You need at least £10,000 to open an account and the maximum balance you can hold is £1million.
Your money is protected up to £120,000 through the Financial Services Compensation Scheme (FSCS).
This amount covers all deposits you hold with Al-Rayan Bank and not just this one, if you do choose to go ahead.
This account isn’t an individual savings account (Isa), so any interest you earn above your personal savings allowance will be taxed. Have a look at our five favourite cash Isas for our pick of tax-free accounts.
In terms of other top one-year fixes, MBNA matches the Prosper fix by offering a rate of 4.85 per cent. The minimum balance is a lower £1,000.
> Open a one-year fix from Al-Rayan Bank through Prosper*
Boost: The Prosper bonus interestingly isn’t treated as interest by HMRC
Prosper allows you to compare savings accounts and open them using one log in.
The 4.85 per cent one-year fix is far ahead of similar options available through Prosper itself.
A bank called BLME is offering a 4.45 per cent one-year fix through the platform, while challenger bank Oaknorth is offering 4.43 per cent over 12 months.
The next best one-year fix outside of Prosper and MBNA is offered by Melton BS at a rate of 4.8 per cent. This requires a lower balance of £5,000 to get started and is available directly from the building society. You can discover more top rates in our table of the best fixed-rate savings accounts.
How does the boost work?
The interest earned from the underlying 4.6 per cent rate accrues daily and is paid by Al-Rayan Bank on maturity.
The 0.25 per cent boost is payable by Prosper and this portion should hit your nominated bank account the week following maturity.
The bonus isn’t treated as interest by HMRC. Rather the taxman sees it as a cashback incentive for signing up to Prosper – therefore there will be no tax to pay on this part of the earnings.
A mini rate battle has kicked off among Isa providers
It’s a good idea to maximise your tax-free Isa allowance before saving money in taxable accounts.
Both Trading 212 and Plum offer top easy-access Isas – and a rate skirmish has kicked off between them.
Over the last week both providers have inched up their rates with Trading 212 now offering 4.62 per cent variable, including a fixed 1.02 per cent bonus for 12 months.
The underlying rate follows the base rate minus 0.15 per cent, meaning it’s currently 3.6 per cent. Find out more and open an account with Trading 212*.
Plum is offering 4.6 per cent variable, which also includes a 12-month bonus of 2.06 per cent – this makes Plum’s underlying rate a much lower 2.54 per cent. Find out more and open an account with Plum*.
With your rate often dropping sharply at the end of a bonus period, it’s worth setting a reminder to compare your options when the time comes.
Your money is protected under the FSCS with both Plum and Trading 212 but they spread your savings among different partner banks – so be sure to check which ones they hold your money with.
The £120,000 limit applies for each bank rather than deposit – so if you’ve got existing holdings with a partner bank, a new deposit will count toward that limit.
SAVE MONEY, MAKE MONEY
4.62% cash Isa
4.62% cash Isa
Trading 212: 1.02% fixed 12-month bonus
£5,000 cashback
£5,000 cashback
1% cashback up to £5,000 when transferring
Internet with gift card
Internet with gift card
£120 voucher when you take out broadband
£200 with Sipp
£200 with Sipp
£200 cashback when you open a pension
£20 gift card
£20 gift card
Open a Plum Isa and hold £1,000 for 90 days
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