Investment platforms paying the highest interest rate on cash

5 min Read Published: 22 Feb 2024

Which investment platform pays the best interest when holding cash?An investment platform provides a single place for investors to buy and hold a range of investments. For some, the best option is simply the cheapest platform, while for others it may come down to performance, investment choice, ease of use or even the tools and features that they can access. With recent rises in interest rates and increased market volatility, investors are starting to consider the amount of interest an investment platform pays while their money is sitting in cash. In this article, we explain how and when investment platforms pay interest on cash and which platforms pay the highest rate of interest.

1 minute summary - Which Investment platform pays the highest interest rate on cash?

  • Not all investment platforms pay interest on the cash you hold with them
  • Some investment platforms pay a tiered rate of interest that increases based on the amount of cash you hold, whereas, some investment platforms pay a flat rate irrespective of the amount held
  • Some products may attract a higher level of interest, for example, some lenders pay a higher rate of interest on cash held in a SIPP, compared to a Stocks & Shares ISA
  • If you are simply looking for the investment platform that pays the highest interest on cash, then Bestinvest* currently pays 4.35% on all cash held on its platform

Interest payments on cash – Investment platform comparison

Below, we compare 8 of the top investment platforms in the UK, including AJ Bell, Bestinvest, Charles Stanley Direct, Fidelity, Hargreaves Lansdown, Interactive Investor, iWeb and Vanguard.

Interest paid on cash held in an ISA

Cash Balance £10,000 £25,000 £50,000 £100,000 £250,000
AJ Bell*  1.95% 2.25% 2.35% 2.40% 2.43%
Bestinvest* 4.35% 4.35% 4.35% 4.35% 4.35%
Charles Stanley Direct 1.00% 2.11% 2.48% 2.77% 3.06%
Fidelity* 3.45% 3.45% 3.45% 3.45% 3.45%
Hargreaves Lansdown* 3.00% 3.12% 3.16% 3.25% 3.53%
Interactive Investor* 1.75% 2.35% 2.53% 2.65% 3.31%
iWeb 0.00% 0.00% 0.00% 0.00% 0.00%
Vanguard 2.60% 2.60% 2.60% 2.60% 2.60%

Interest paid on cash held in a SIPP

Cash Balance £10,000 £25,000 £50,000 £100,000 £250,000
AJ Bell* 3.20% 3.50% 3.60% 3.65% 3.68%
Bestinvest* 4.35% 4.35% 4.35% 4.35% 4.35%
Charles Stanley Direct 1.00% 2.11% 2.48% 2.77% 3.06%
Fidelity* 3.65% 3.65% 3.65% 3.65% 3.65%
Hargreaves Lansdown* 3.45% 3.57% 3.61% 3.76% 4.02%
Interactive Investor* 2.75% 3.20% 3.35% 3.43% 3.77%
iWeb 3.55% 3.55% 3.55% 3.55% 3.55%
Vanguard 2.60% 2.60% 2.60% 2.60% 2.60%

Many providers pay interest on a tiered scale. We provide a more detailed breakdown of the interest paid on cash for each provider later in this article.

Do all investment platforms pay interest on cash?

No, not all investment platforms pay interest on the cash held in customer accounts. Additionally, the amount of interest paid is down to the individual platform and is often subject to change at any time. While there are some platforms that do not pay any interest, most investment platforms will pay a small amount of interest on the cash held in customer accounts.

Some platforms pay a flat amount irrespective of the amount of cash held, however, most have a tiered structure where they will pay a higher amount of interest on larger sums of cash held. See our comparison table below for more information.

How do interest payments on cash work?

Most investment platforms will quote two interest rates, Gross % and AER %. The Gross interest rate is the rate of interest payable before any tax is deducted and the AER interest rate is the rate payable over a year with the effect of compounding included. As a result, the AER interest rate is often fractionally higher. For simplicity, any interest rates quoted in this article are Gross rates.

Interest on cash held with an investment platform accrues daily and is usually paid either monthly or annually. It is worth checking the terms and conditions with your chosen provider because each platform will have its own set of rules and guidelines. For example, Fidelity will not credit any interest payments below £5 if the customer does not have any holdings.

Which platform pays the highest interest when holding cash?

This isn't straightforward to answer as it depends on how much cash you hold. Some investment platforms pay a set rate of interest irrespective of how much cash you hold on the platform, whereas others offer a tiered scale, paying you a higher amount of interest as you break through each tier. Crucially, investment platforms rarely offer you a higher amount of interest on your cash total and so you'll only get the higher rate on the amount that is over the threshold. Below we have detailed the interest paid on cash holdings from a number of UK investment platforms, including the tiers.

Compare the best investment platforms for interest on cash

Many investment platforms mentioned in this article offer a tiered rate of interest which can make it difficult to work out the actual interest rate you'll get on your cash holdings. To make it easier to compare providers, our tables above display the effective interest rate, taking into account provider tiers, you will get based on whether you have £10k, £25k, £50k, £100k or £250k held in cash with each platform.

Below, we've broken down the interest paid on cash held in an ISA account and also cash held in a SIPP account.

AJ Bell interest rate on cash

Pays a tiered scale as follows:

AJ Bell ISA

  • £0 – £10,000 – 1.95%
  • Over £10,000 – 2.45%

AJ Bell SIPP

  • £0 – £10,000 – 3.20%
  • Over £10,000 – 3.70%

Bestinvest interest rate on cash

Pays a flat rate as follows:

Bestinvest ISA

  • Any cash amount – 4.35%

Bestinvest SIPP

  • Any cash amount – 4.35%

Charles Stanley direct interest rate on cash

Pays a tiered scale as follows:

Charles Stanley Direct ISA

  • £0 – £24,999 – 1.00%
  • £25,000 – £49,999 – 2.85%
  • £50,000 – £99,999 – 3.05%
  • Over £100,000 – 3.25%

Charles Stanley Direct SIPP

  • £0 – £24,999 – 1.00%
  • £25,000 – £49,999 – 2.85%
  • £50,000 – £99,999 – 3.05%
  • Over £100,000 – 3.25%

Fidelity interest rate on cash

Pays a flat rate as follows:

ISA

  • Any cash amount – 3.45%

SIPP

  • Any cash amount – 3.65%

Hargreaves Lansdown interest rate on cash

Pays a tiered scale as follows:

Hargreaves Lansdown ISA

  • £0 – £9,999 – 3.00%
  • £10,000 – £49,999 – 3.20%
  • £50,000 – £99,999 – 3.40%
  • Over £100,000 – 3.70%

Hargreaves Lansdown SIPP

  • £0 – £9,999 – 3.45%
  • £10,000 – £49,999 – 3.65%
  • £50,000 – £99,999 – 3.90%
  • Over £100,000 – 4.20%

Interactive Investor interest rate on cash

Pays a tiered scale as follows:

ii ISA

  • £0 – £9,999 – 1.75%
  • £10,000 – £99,999 – 2.75%
  • Over £100,000 – 3.75%

ii SIPP

  • £0 – £9,999 – 2.75%
  • £10,000 – £99,999 – 3.50%
  • Over £100,000 – 4.00%

iWeb interest rate on cash

Pays a flat rate as follows:

iWeb ISA

  • Any cash amount – 0.00%

iWeb SIPP

  • Any cash amount – 3.55%

Vanguard interest rate on cash

Pays a flat rate as follows:

Vanguard ISA

  • Any cash amount – 2.60%

Vanguard SIPP

  • Any cash amount – 2.60%

Why is the interest paid on cash held in an investment platform so low?

Investment platforms typically charge a number of fees when you invest via their platform and these can include platform fees, fund management fees, trading fees, administration fees and exit fees to name just a few. None of these charges can be applied to money held in cash and so investment platforms earn money on the difference between the interest they are able to earn on the cash, compared to what they pay their customers.

AJ Bell explains how this works as follows: “AJ Bell receives payments from banks based on the aggregate cash balances held across all accounts. The amount we receive will vary depending on the total cash balances held and market interest rates. Over the foreseeable future, we expect to receive between 0.10% below and 0.60% above the prevailing base rate for cash held within a SIPP, although it may be higher or lower when interest rates are volatile. These payments are used to pay interest at the rates shown on our website, and we retain the amount received above these rates to keep our administration, custody and dealing charges low”.

Where can I get the highest interest rate on my cash?

The Bank of England base rate currently sits at 5.25%, the highest level since March 2008, following a number of rate rises in an attempt to reduce the UK's annual inflation rate. Naturally, as the Bank of England base rate rises, so does the interest rate on savings products, as lenders compete to attract savers with market-leading interest rate offers.

We have a regularly updated article that lists the Best Savings Accounts in the UK, including easy-access accounts, high-interest savings accounts, fixed-rate bonds and cash ISAs.

 

 

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