Plum now delaying cash ISA monthly interest payments

sstephanie40

Just wanted to highlight this change of policy, notified by email today. 

Up until now monthly interest on my cash ISA account has been paid on the first day of the next month. One day later. 

Now they're going to pay it - the last day of the following month ie 30/31 days later.

As per the email:

The interest you earn for October 2024 will be paid into your Cash ISA on 1 November as we do currently.

The interest you earn for November will be paid into your account on 31 December, 2024.

Is this something to be concerned about, for example their availability of funds to pay interest?

Can they do this mid way through the life of the ISA?

To me this is a bit of a red flag. Advice please. 

Mark_d

If this isn't a misprint then it does sound rather dodgy.  Your capital should be safe but personally I wouldn't be comfortable dealing with a company that changes conditions like this.

Since they're delaying your interest payment, you will be earning less interest than the advertised annual rate, so ...I suggest going elsewhere

sstephanie40

Thank you. Is this something I can challenge them on? It might contravene the t&c that I agreed to at the opening of the account? 

eskbanker

sstephanie40 said:

Thank you. Is this something I can challenge them on? It might contravene the t&c that I agreed to at the opening of the account? 

You'd need to look at those Ts & Cs to see if/how they accommodate variations to terms - most will have some sort of clause permitting changes but with the potential for the customer to walk away if they're detrimental.

sstephanie40

Thank you, I'll take a look and see what they have. 

Newbie_John

Just seen an email, they already delay interests by keeping bonus for 12 months and now it says we'll get interests on 1 Nov and then.. 31st Dec 😅

Keeping in mind they track BoE interest rates, it's very likely their 4.92% will drop again in November - so I'll move my money away at the end of this month keeping there just a £100.

masonic

Newbie_John said:

Keeping in mind they track BoE interest rates, it's very likely their 4.92% will drop again in November - so I'll move my money away at the end of this month keeping there just a £100.

The mere change to the way they pay interest will have dropped the AER, since the interest earned doesn't start compounding until it is credited. 

Do they provide you with a revised AER in the email?

It seems a very desperate measure suggesting cashflow problems somewhere in the chain. Not really inspiring confidence in their business model.

sstephanie40

Newbie_John said:

Just seen an email, they already delay interests by keeping bonus for 12 months and now it says we'll get interests on 1 Nov and then.. 31st Dec 😅

Keeping in mind they track BoE interest rates, it's very likely their 4.92% will drop again in November - so I'll move my money away at the end of this month keeping there just a £100.

I have another old ISA to re fix at the end of the month so I'll also withdraw then. 

sstephanie40

So I asked Plum the question about interest and this is their reply. It doesn't instil confidence. 

They say:

Even though interest is credited to your Cash ISA at the end of the following month, your interest calculation and compounding are not affected.

Interest compounds monthly, based on the accrued balance, not just the credited amount.

For example:

• The interest you earn in November will be credited at the end of December.
  However, for the month of December, your November interest is already considered when calculating the total balance that earns interest.

So, while the crediting occurs later, the interest still compounds monthly, ensuring your total balance grows consistently.

I take from this that's it's a cash flow issue. Which is worrying.

​

masonic

If that's correct (and I don't have much confidence in their front-line support being well educated in these details), then it is even more bizarre as the balance of your account is just a number on a screen until you actually withdraw it. So what difference does it make to credit the interest vs not if you are still accruing interest on it either way? They can't avoid crediting it immediately if your ISA is transferred out to another provider. How much benefit are they going to get from hiding the last few pounds of the money that is acknowledged to be part of each customer's balance that is accruing interest?

wmb194

masonic said:

If that's correct (and I don't have much confidence in their front-line support being well educated in these details), then it is even more bizarre as the balance of your account is just a number on a screen until you actually withdraw it. So what difference does it make to credit the interest vs not if you are still accruing interest on it either way? They can't avoid crediting it immediately if your ISA is transferred out to another provider. How much benefit are they going to get from hiding the last few pounds of the money that is acknowledged to be part of each customer's balance that is accruing interest?

Plum Fintech Ltd's filings on Companies House make for alarming reading as it appears to be haemorrhaging cash but on the other hand it's still raising money - £16.1m a few months ago, comprised of a £13.4m "Series B" funding round and £2.7m via Crowdcube.

https://www.fintechfutures.com/2024/07/uk-money-management-app-plum-raises-16-1m-investment/

https://find-and-update.company-information.service.gov.uk/company/09952199/filing-history