Have you been sitting on a pile of GBP (Pounds Sterling) that you intend on investing but are currently just sitting on it waiting for a market downturn?
Well, in times gone by, there was very little you could do to try to preserve the buying power of your uninvested cash, as banks and other institutions were not prepared to offer you any interest.
But now, since the sharp rise in interest rates across the globe, investment brokerages have led the way in offering brokerage savings accounts with decent interest rates (almost completely risk-free in most cases).
In this blog post, we will take a closer look at what the best interest rate offerings are on the market right now for your uninvested GBP cash.
Looking for interest on EUR cash? Check our article on the best brokerage account interest rates on Uninvested EUR cash.
From looking at all the different products available on the market right now, we consider the best service to be provided by Hargreaves Lansdown or Interactive Investor, where you can earn up to 5.15-5.20% interest if you don’t mind locking up your funds for 2 years.
For those who wish to readily access your cash, Wise is a great alternative offering you 3.89% on uninvested GBP.
|Provider||GBP Interest Rate||Limits|
|Hargreaves Lansdown||From 3.51% to 5.15%||Minimum deposit requirements apply to some products. You will only get the highest interest rate if you lock up funds for 2 years|
|Interactive Investor||From 1.10% to 2.10% on Trading Accounts, up to 5.2% on Cash Savings Products||A lower rate on the first £10k on Trading Account.
Minimum Deposit of £10k on Cash Savings Products
|Freetrade||1% standard / 3% Plus||Up to £2k on Standard Account and £4k on Plus|
|Saxo Bank*||Tiered rates||Zero interest on Deposits < £10k|
|IBRK Lite/IBRK Pro **||2.898% / 3.898%||Zero interest on Deposits < £8k|
Rates were last updated on 29/5/2023.
* Saxo Bank currently offers a tiered interest rate that varies depending on the deposit amount held on the account and also the account type.
** The interest rates referenced for Interactive Brokers reflect the maximum possible rate for each type. The rate you actually earn may be lower.
Hargreaves Lansdown GBP interest rate
- What rate is on offer? The interest rate you can earn on your GBP cash with Hargreaves Lansdown will differ from product to product; the longer you lock up your funds, the higher the rate you can get. Easy Access – 3.51% AER (Annual Equivalent Rate); 1 year – 4.93% AER; 18 Months – 4.98% AER; 2 Years – 5.15% AER
- How often is interest paid? Usually paid monthly or just on maturity depending on the product.
- Are there any restrictions? With any of Hargreaves Lansdown’s fixed-term products, you won’t be able to withdraw your funds early. There are also minimum deposit requirements on some of the products on offer that range from £1 – £10,000.
- Is your money safe? Once your money is in a savings product, it’s covered by the Financial Services Compensation Scheme (FSCS) up to £85k should the bank or building society providing that product default on its obligations.
Hargreaves Lansdown is a well-established and respected financial service provider that has been operating in the UK for over 40 years and currently has £120bn in client assets and over 1.7 million users. They are one of the few providers on the market offering a whole suite of services from investment advice, ISAs, SIPPs, Forex, Stocks, ETFs, and Savings products.
Hargreaves Lansdown has partnered with numerous banks and building societies which means they have a large range of products on offer and some of the best rates available.
Interactive Investor GBP interest rate
- What rate is on offer? The interest rate you will earn on your uninvested cash in your ii trading account with Interactive Investors will depend on the level of deposits you have in your account. You can earn 1.10% on the first £10k and 2.10% on the value over £10k. For those happy to lock up their funds for some time, Interactive Investor has a standalone Cash Savings service provided by Flagstone and is not linked to your ii, Trading Account, SIPP, ISA, etc. With this service, you can avail of the best deals on the market from over 25 different banks; currently, you can earn 5.2% interest on your GBP with a term of 3 years. The shortest savings product is 4.31% for savers looking to lock up funds for 6 months.
- How often is interest paid? Monthly
- Are there any restrictions? A lower interest rate is applied to your first £10k uninvested cash in your Trading Account. For Interactive Investors Cash Savings Products, all have a minimum deposit level of £10k and maximums ranging from £85k-£250k.
- Is your money safe? To ensure its safety, any money you hold with Interactive Investors is placed in a bank account that is established with statutory trust status. This means your money is kept separate from the cash needed for business operations. You are also protected by the Financial Services Compensation Scheme (FSCS) up to £85,000.
Interactive Investors flagship ii Trading Account allows you to access a wide variety of trading options (over 40,000 UK and global stocks). On top of this, you can start an ISA, Junior ISA, and SIPP, all with ii.
For general trading, they have two different plans; the Investor Essentials plan, which costs £4.99 per month for investors with account sizes of £30k or less, and the Investor plan, which is for accounts over £30k in size costing £9.99 per month. Separate from this, there are quite expensive online trading fees.
With Interactive Investor, you will also be able to invest in the company’s IPOs and Bond launches before they hit the market.
Wise GBP interest rate
- What rate is on offer? GBP Interest rate is 3.89%.
- How often is interest paid? Interest is charged monthly and deposited straight into your account.
- Are there any restrictions? there are no additional limits to the amount customers can hold in their accounts and no balance minimums or fees involved.
- Is your money safe? Wise does implement certain safeguards for customer funds. These funds are segregated into a combination of cash held in reputable commercial banks like JP Morgan Chase and low-risk liquid assets in Money Market Funds managed by BlackRock and State Street. Wise states that you could face times when access to your cash is restricted, during extreme volatility in the market for government assets, to preserve the value of your assets.
Wise is slightly different from the rest of the brokers that made our list, as it is primarily an eMoney business that helps individuals seeking cost-effective solutions for international money transfers.
Even though it is an eMoney business, Wise does give you the option to hold your funds in Cash, Stocks, or Interest. When you decide to opt for stock, Wise will select an appropriate index fund and make investments on your behalf.
If you decide to switch your funds to the ‘interest’ option, Wise will invest them in government-backed short-term loans and bank deposits. The interest earned through these investments is then passed on to you.
The downside of this for investors is that the service is currently a bit limited if your ultimate goal is to invest those uninvested funds more freely in stocks, ETFs, etc., of your choosing.
Freetrade GBP interest rate
- What rate is on offer? 1% for a Standard account and 3% for a Plus account.
- How often is interest paid? Interest will be added directly to your account on the 11th working day of every month.
- Are there any restrictions? There are restrictions on the amount of interest you can earn with Freetrade. Firstly, if you have a basic account, you won’t earn any interest. Standard account users can earn 1% interest but only up to a maximum cash balance of £2k. Plus, account users can earn 3% interest and an increased maximum cash balance of £4k.
- Is your money safe? When you have funds deposited or invested with Freetrade, these will be segregated and are not permitted to be used to pay down creditors if, in the worst-case scenario, Freetrade were to go bust. Freetrade is also part of the Financial Services Compensation Scheme (FSCS), which protects your assets up to £85k.
Over 1 million users enjoy Freetrade’s services, including the usual stock and ETF investing. Still, they offer stocks and shares ISAs (Individual Savings Accounts) and SIPPs (self-invested personal pensions).
Freetrade has three different account types – Basic, Standard, and Plus which will determine what features you will have access to – including the interest rate you can earn on uninvested GBP cash.
Lightyear GBP interest rate
- What rate is on offer? GBP Interest rate 3.75%
- How often is interest paid? Interest will be credited to your account on the first of every month.
- Are there any restrictions? No Limits
- Is your money safe? Lightyear does implement safeguards for customer funds. Uninvested customer funds are kept separate from Lightyear’s own business funds and are held with regulated EU credit institutions and money market funds.
The primary institutions where Lightyear holds uninvested customer funds include ABN AMRO Bank in the Netherlands and AS LHV Bank in Estonia. Additionally, a portion of the funds is invested in BlackRock money market funds that hold AAA/mmf ratings from Moody’s, S&P, and Fitch.
But it is important to note what Lightyear states on their website so you fully understand how your account works, “funds held in your Lightyear account are not equivalent to a bank deposit, and therefore in the unlikely event that all appropriate safeguards fail, funds are ultimately protected by the Investor Protection Sectoral Fund only for amounts up to 20,000 EUR in total across all your multi-currency account balances. Funds are not covered by the Deposit Guarantee Sectoral Fund, as it only covers bank deposits”.
Lightyear has hired many former employees of popular brokers, banks, and e money businesses such as Robinhood, Revolut, and Wise with the aim of breaking down some barriers with their platform.
Their main selling point is their straightforward, equitable, and transparent pricing structure, and they have a wide offering of international stocks and ETFs to choose from (over 3,000 at present).
Vanguard GBP interest rate
- What rate is on offer? 2.20% on GBP
- How often is interest paid? Any cash in your account will earn interest daily and will normally be paid into your account on the first working day of the month.
- Are there any restrictions? No limits
- Is your money safe? Vanguard is covered by the Financial Services Compensation Scheme (FSCS). This means you may be entitled to compensation of up to £85,000 in the unlikely event that we’re unable to meet our financial obligations to you.
Vanguard is one of the most recognisable names in investing circles; you’ve probably invested in one of their funds before, as they are the largest provider of mutual funds and the second largest provider of ETFs worldwide. Aside from this, they also offer investment services to individuals, such as general trading accounts, ISAs, and personal pensions.
In terms of the interest you can earn on uninvested cash with Vanguard, their offering is quite simple at a flat rate of 2.20%, no matter what currency you hold it in. Vanguard state they may earn more interest on those funds but will only pass on the 2.20%, and the remainder will be used to provide the best service possible to you.
Fidelity GBP interest rate
- What rate is on offer? 2.10% Trading Accounts, Cash Management Accounts, and ISAs. 2.55% on SIPPs.
- How often is interest paid? Annually in arrears
- Are there any restrictions? No limits
- Is your money safe? The cash you have on hold with Fidelity is spread among a number of well-trusted banks such as Barclays, HSBC, Royal Bank of Scotland, Lloyds, and Bank of America. On top of this, you are protected by the Financial Service Compensation Scheme (FSCS).
Fidelity offers a wide variety of services; with Fidelity, you can manage your general investments, get wealth management advice, and plan for your retirement all in one place.
Another thing we really like about Fidelity is how they seamlessly embed expert advice and research tools into their offering. But please note Fidelity’s advice service is targeted at people with a minimum of £100k to invest.
SAXO Bank GBP interest rate
- What rate is on offer? The interest rate on offer will be tiered based on the level of funds you have on deposit and whether you have a Classic, Platinum, or VIP account. This makes it difficult to find a relevant rate for each reader. Check out Saxo Bank’s calculator to see how much interest you could potentially earn. For instance, having £30k on deposit would yield an interest rate of 0.636% for a classic account, 0.686% for a Platinum account, and 0.736% for a VIP account.
- How often is interest paid? Interest is earned daily and credited to your account monthly.
- Are there any restrictions? Any accounts with a balance below USD 10,000 will not be eligible to earn any interest. There is no lock-up period.
- Is your money safe? If a Danish bank (including Saxo Bank) should suspend its payments or go bankrupt, client deposits are guaranteed by the Fund with up to EUR 100,000 for cash deposits.
Saxo Bank is a leading Danish investment bank with nearly 900,000 users, providing a wide range of financial services to clients around the world. With its innovative trading platforms, such as SaxoTraderGo and SaxoTraderPro, you can trade like someone on Wall Street.
Whether you are an individual trader, a professional trader, or looking to set up a corporate account, Saxo Bank will have a solution for you.
When it comes to the interest rates on offer, Saxo Bank is still lagging behind some of its competitors.
Interactive Brokers GBP interest rate
- What rate is on offer? The interest rate you will earn with Interactive Brokers will depend on your account type and how much you have on deposit. The maximum interest rate available for GBP balances is 3.898% for IBKR Pro accounts and 2.898% for IBKR Lite accounts.
- How often is interest paid? Interest accruals are calculated monthly and will be credited to your account within the first couple of days after the month’s end. You will see these amounts reflected on your statement. You can only earn interest on settled money. Therefore, if you buy a stock, you will keep earning interest on that money until the settlement date of the trade. Similarly, sellers only start to receive interest beginning on the settlement date.
- Are there any restrictions? Unfortunately, the first £8k of your GBP cash balance with Interactive Brokers does not accrue any interest whatsoever. You are not also automatically entitled to earn the full interest rate as advertised; the rate you earn will depend on how much you have on deposit with Interactive Brokers. Only those with accounts with a Net Asset Value (NAV) of USD 100,000 or more are eligible to receive interest at the full rate. For accounts with a NAV below USD 100,000 (or its equivalent), the interest rates are proportionate to the account size. It is not straightforward to work out the exact interest rate you will receive from Interactive Brokers, but they do have a calculator you can work with to get a good estimate of what rate you may get.
- Is your money safe? The level of protection you will receive on your cash deposited with Interactive Brokers will vary a lot from jurisdiction to jurisdiction, this is something we covered in detail in a separate blog post if you are interested in learning more about your protections with IBRK and we also have a full review IBKR’s services if you want to dig a little deeper.
Interactive Brokers has one of the most comprehensive service offerings on the market that allow you to trade instruments such as options, futures, crypto, and bonds, which not many other brokerages allow you to do.
They also have superb analytical tools, such as their Trader Workstation (TWS), to help you hone your development of more technical trading strategies.
Investors are in an enviable position now compared to years ago, as they can earn risk-free returns of up to 5%. But to get the highest rates on offer, you’ll have to be prepared to lock up your GBP for some time, which may not suit everyone.
But remember, the highest rate is now always the right option to choose; it is important to foremost take into consideration how your funds will be protected above all else.