New cashback offers launched for Cash ISA savers

With just a few weeks remaining until the end of the tax year on 5th April, competition among investment platforms, banks and building societies is heating up. This period, often referred to as 'ISA season', typically sees providers launching their best rates and incentives to attract savers looking to maximise their £20,000 annual tax-free allowance before it resets on the 6th April. While many providers are offering boosted rates for a limited period, we've also started to see cashback incentives of up to £100 for customers who fund a Cash ISA before the tax year end. In this article, we look at two cashback offers from Zopa and Prosper, explaining how they work and what you need to consider before applying.

How does the Zopa Cash ISA cashback offer work?

Zopa is offering up to £50 in cashback when you deposit money into a Zopa Cash ISA. The amount of cashback you receive depends on how much you deposit into the account during the qualifying period:

• Deposit between £5,000 and £9,999 - Receive £25 in cashback
• Deposit £10,000 or more - Receive £50 in cashback

To qualify for the bonus, the funds must be deposited into your Zopa Cash ISA before the end of the current tax year on 5th April.

How does the Zopa Cash ISA work?

The Zopa Cash ISA, referred to as its "Smart ISA", is an app-based account that gives you flexibility with your tax-free savings. You can open the account with a minimum deposit of just £1.

A key feature of the Smart ISA is the ability to mix and match different savings 'pots' within a single Cash ISA wrapper. This means you can divide your annual ISA allowance across both easy-access and fixed-term options without needing to open multiple accounts.

Within the Zopa app, you can choose to split your money between two types of pots:

• 'Access' ISA pots - This is an easy-access option currently paying a variable interest rate of 3.25% AER. You can add or withdraw money whenever you like without paying a penalty or affecting your remaining ISA allowance.
• 'Fixed Term' ISA pots - If you want a guaranteed return, you can lock your money away for a set period of 1 to 5 years. Zopa's one-year fixed term currently pays the highest rate at 4.16% AER. While the rates are fixed, withdrawing money from these pots before the end of your chosen term will result in a penalty.

By using the mix and match feature, you can keep a portion of your savings available in case of emergencies, while securing a fixed interest rate on the rest of your balance.

How does the Prosper cashback offer work?

Prosper, a wealth management app, is offering a £100 cashback reward for new customers who open and fund an account. Unlike the Zopa offer, this is not restricted to just Cash ISAs. You can qualify by opening any Prosper savings or investment account.

To get the £100 cashback, you must meet the following criteria:

• Be a new customer to Prosper
• Enter the promo code PROSPERCASH at the bottom of the welcome screen when signing up for the app
• Open and fund any Prosper savings or investment account with a minimum deposit of £10,000.
• Keep the minimum £10,000 balance on the platform for at least six months. This balance can be spread across both savings and investments

Once you have met the six-month holding period and all eligibility criteria, the £100 reward will be paid to you.

The Prosper Cash ISA currently pays a variable interest rate of 4.70% AER for the first 12 months, which includes a boosted rate of 1.92% AER for 12 months. The account requires a £10,000 minimum deposit to open and allows flexible withdrawals. Capital is at risk. Investments can go down as well as up. New customers only. Ts&Cs apply.

Are cashback offers worth it?

While a cash bonus of up to £100 is an attractive incentive, you should always compare a provider's underlying interest rates with the rest of the market to ensure you are getting the best possible return on your money. Even a slightly lower interest rate could quickly wipe out the benefit of a cashback bonus over the course of a year, particularly if you are depositing larger balances of £10,000 or more. It is important to look at the bigger picture, ensuring that the app or platform is the right fit for your finances, and you should never make a decision based purely on a cash perk.

It is a competitive market right now and many Cash ISA providers are offering 'limited-time' boosted rates, so it is worth shopping around to ensure you are getting the best deal. To check out the best rates in the market right now, go to our article 'Best Cash ISAs in the UK'.

 

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.