Is there a cash interest rate battle brewing between investment providers and fintechs?

Instead of reducing its interest rate in response to yesterday’s BoE 25 basis point cut, leading UK online broker IG Group has announced that it is doubling interest to a market-leading 8.5% for new UK customers, until August 31. IG is now offering 8.5% AER variable interest on cash for new customers – double the Bank of England base rate of 4.25%.

New UK customers who open an account and make an initial investment before May 31 will earn the boosted rate until August 31. IG’s offer available is across ISA, SIPP and General Investment Account (GIA) products, open to customers who open an ISA, SIPP or GIA account and make an initial investment before May 31. Customers who meet the qualifying criteria will benefit from the increased interest until August 31. After this date, interest reverts to IG’s standard variable rate, which currently matches the Bank of England’s base rate (4.25% AER variable), making it highly competitive for existing clients.

The announcement of the offer comes as the Bank of England lowers its base rate to 4.25% AER, a move which typically prompts banks and investment platforms to reduce their own interest rates. IG said that its boosted cash interest rate is significantly higher than any rates currently on the market.

Michael Healy, UK Managing Director of IG, said,

“While others cut, we’re doubling down. At a time when rates are falling and investors are cautious, we’re offering new customers a standout return on their cash of 8.5%.

“Many investors are sitting on the sidelines right now as they wait for market clarity – this offer gives them a place to park their money and still earn a serious return which is head and shoulders above anything else out there. From zero commission on stocks to transparent fees and market leading cash interest rates, we want to give investors the best possible value.”

Interest paid on the additional 4.25% bonus rate (on top of the standard rate) will be available across all ISA, SIPP or GIA accounts across the IG platform and the IG Invest app, launched earlier this year. Existing account holders will also be eligible for the offer, providing they have not yet placed their first trade and do so by May 31.

To access the rate, customers must hold an open investment position at the end of each month (June, July and August).

Interest new customers can earn on cash with the IG offer:

The launch of the 8.5% boosted rate follows a series of recent initiatives from IG, including commission-free share investing, which launched earlier this year.

About IG Group

IG Group (LON:IGG) provides online trading platforms and educational resources to empower ambitious clients around the globe. Headquartered in the UK, IG Group is a FTSE 250 company that offers clients access to c.19,000 financial markets worldwide.