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Find out more'I've found a way to get more interest on my Isa, but is there a catch?'
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I want to get a better rate on my cash Isa and found Trading 212 offering a particular rate.
But when I looked at its stocks and shares Isa, I discovered I could get a higher rate on uninvested cash.
Which product should I pick?
Mr Ball from Essex
'Your money is technically being invested'
Rubal Channa, Which? money expert, says…
The answer comes down to how comfortable you are with a relatively low level of risk. Trading 212 holds customers’ cash Isa money in partner banks, but some of the money in its stocks and shares Isas that earns interest is invested in money market funds.
These are funds that hold cash, cash equivalents and short-term bonds. Returns aren’t guaranteed, but money market funds are very low volatility and risk.
Indeed, these funds are usually rated a one on the industry’s standard seven-point scale (with seven being highest risk).
In the event Trading 212 went bust, you would still benefit from some protection
Trading 212 warns that money held in money market funds isn’t covered by the Financial Services Compensation Scheme, unlike money in its partner banks.
But as an electronic money provider, Trading 212 has to keep client funds separate. So, in the event it went bust, you would still benefit from some protection.
Other readers should be aware that (at the time of writing) they could get an even higher rate on Trading 212’s cash Isa if they apply through moneyfactscompare.co.uk. This may include a bonus for a limited period.
- Find out more: How to invest: a beginner's guide
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