Best Interest Rates on Uninvested Cash

Which brokers and investment platforms pay the most interest on uninvested cash?

Currently, Trading 212 (5.10%), Dodl (5.09%) Freetrade (5%) and Bestinvest (4.2%) pay some of the most interest on uninvested cash.

If you have stepped away into cash, you can still get some pretty decent returns with these investment accounts, even though rates have largely fallen across the board over the last year.

There are some caveats: With AJ Bell’s Dodl and Freetrade, the former only offers ISAs and Freetrade has a tiered subscription for interest-paying accounts.

Trading 212 offers perhaps the easiest route to immediately earning a good interest on cash. However, this requires opting in for your money to be placed in money market funds, which do not receive the standard Financial Services Compensation Scheme (FSCS) guarantee on balances up to £85,000.

Bestinvest offers one of the overall simplest and safest options for those looking for decent rates, with the same rate paid regardless of how much uninvested cash you keep in their accounts.

By contrast, several other investment platforms heavily scale the interest rates they pay according to account balances.

Bestinvest – up to 4.2% interest

Bestinvest pays 4.2% on all cash held in any of your accounts and doesn’t have account tiers  So, unlike – for example – Interactive Brokers you can still receive interest on cash if you have an account balance less than £8k.

Trading 212 – 5.10%

Trading 212 offers 5.10% interest on all account types, including general investment accounts and ISAs.This requires users to opt-in, as their money will be placed in money market funds.

Money market funds are treated as investments and as such do not receive the standard Financial Services Compensation Scheme (FSCS) guarantee on balances up to £85,000 should they fail and lose money. It is rare for a money market fund to fail, but it could still happen, particularly in conditions of extreme market volatility

AJ Bell Dodl – 5.09% interest

At 5.09%, the ISA and Lifetime ISA on AJ Bell’s Dodl simplified investment app offer one of the best interest rates among competitors. Dodl does not offer a general investment account or SIPP, however.

Freetrade – maximum 5% interest on up to £3,000

Freetrade offers a maximum of 5% interest on up to £3,000 in uninvested cash under its Plus account subscription plan, which charges £9.99 a month.

Freetrade’s lowest tier Basic Account plan, which is free to use, offers interest of 1% up to £1,000.

The Basic plan offers a general account, while the Premium plan offers access to an ISA and personal pension.

Lightyear –  3% (up to 5.08% with “Vaults”)

Lightyear offers a standard interest rate on cash of 3% across all account types. Customers can further boost this up to 5.08% by allocating their money to Vaults, or money market funds, which are managed by BlackRock.

Money market funds are treated as investments and as such do not receive the standard Financial Services Compensation Scheme (FSCS) guarantee on balances up to £85,000 should they fail and lose money. It is rare for a money market fund to fail, but it could still happen, particularly in conditions of extreme market volatility

Interactive Brokers (IBKR) – up to 4.48% interest

IBKR offers good interest on uninvested cash (4.48%), but you only get the full amount if you have over £100k on account, including cash and investment. It is not great for small accounts though as there is no interest payable on balances and portfolios below £8k.

Saxo – up to 3.68% interest

Saxo pays up to 3.68% interest on uninvested cash with no lock-in period or cap and your rate tracks the market on a daily basis. But, as with IBKR, if you have less than £10k on account you don’t get any interest. The more you have on account the better interest rates you receive.

To get the top 3.68% interest on cash you need between £1m and £2m in a VIP account.

AJ Bell – up to 3.8% interest

AJ Bell pay fairly high interest on cash balances for their SIPP and Junior SIPP accounts where you can earn up to 3.8%.

For stocks and shares ISAs the maximum interest is 3,34% and with shares dealing accounts the most you can earn is 2.27%.

Interest rate payments are paid quarterly and they are scaled so for example you had £50,000 cash in an AJ Bell account. £10,000 of this money would earn the ‘£0–£10,000’ interest rate, while the remaining £40,000 would earn the ‘Above £10,000’ interest rate.

You can’t combine your SIPP and ISA balances to get better interest rates, as they are charged separately.

Hargreaves Lansdown – up to 4.02% interest

Hargreaves Lansdown has increased interest rates on its accounts, bringing it further in line with competitors.  Its SIPP offers the best rate for uninvested cash at 4.02%, while for an ISA it is 3.51% and for a general account it is 2.68%.

Interactive Investor – up to 4.59% interest

As with all Interactive Investor pricing structures, they are a little complex, as a lot of it is scaled and dependent on what type of account you have.

For ii’s ISA, Junior ISA, and trading accounts, cash balances will receive a certain amount of interest on the first £10,000, then more on the value between £10,000.01 and £100,000, with the maximum paid a the value over £100,000. If you’ve got a very big account with over £1m you can receive the best rate.

eToro – up to 4.8%

To get interest on your free cash balance with eToro you need to activate it. You can get interest now starting at $0.01. The level of interest paid scales according to a customer’s Club Tier, which is determined by how much money they keep in their account.

To get the best interest rate of 4.8% you need a “Diamond” account with a NLV (net liquidation value) of over $250,000.

Vanguard – up to 2.45%

Vanguard offers a standard interest rate of 2.45% across its accounts. This is relatively low compared to rival investment platforms, which the firm justifies by stating it uses part of the interest from its accounts to fund its services.

CMC Invest – up to 2.02%

CMC Invest offers a standard rate of up to 2.02% interest on uninvested cash across any of its accounts