Plum ISA - confused about interest

LiquidNitrogen

I opened a PLUM ISA on April 07th at a preferential rate of 5.92% for three months on the advice of MSE, with a note in the diary to ditch and switch after the increased rate expired. However, I've just logged in to see how things are looking there, and have discovered that:

• The interest accrued is only about £80 for two months on a £16k investment. After googling around it seems that the account will accrue at the basic rate of about 3.5%, and the additional 'bonus' 2.5% or so is applied as a lump sum at the end of the bonus period. Other threads have made reference to this being applied at the end of 12 months, which would basically negate the point of the higher rate in the first place as you'd have to sit at a low rate for 9 months to get it. Does anyone know when I can expect the extra to be applied? (I can't imagine I'd have signed up for it if this were the case but it's possible I missed it.)
  
  
• To compound (!) the above; secondly, I didn't appreciate that late last year, Plum changed their interest payment schedule so that interest isn't credited for a full month after it accrues. There was a MSE thread on it at the time that suggested the interest is still calculated for the month before it becomes visible in the account balance, so the compounding isn't affected, but there was some scepticism on this (mainly because it doesn't make any sense for Plum to do this). Has anyone, in the intervening half-year or so, got to the bottom of what happens if you ditch and switch whilst waiting the extra month for the interest to appear in your balance? Do they have to give you the interest that they claim has been accruing in the background, even though it hasn't been 'applied' to the account? Something makes me think Plum would pocket it, although surely that wouldn't be lawful?

I am waiting for a human to get back to me on the Chat app but there doesn't seem to be anyone there. I notice another user has a thread open saying they're finding it impossible to transfer out of Plum. Very dodgy organisation, wish I'd dug deeper before signing up.

refluxer

Unfortunately, all of the app-based cash ISA providers who are currently offering these table-topping, high easy access rates have quirks and restrictions in their account terms so if you're going to go with any of them, you really have to be on the ball and scrutinise the T&Cs carefully.

To be fair to Plum, they do state clearly at the top of their ISA product page that the bonus is only applied if the account is held for the full 12 months. On that basis, the usual 'ditch and switch' advice that normally applies when a rate is no longer competitive on an easy access savings account wouldn't be appropriate for this particular account, unless I'm missing something.

It's worth noting that MSE only reports on the top rates and doesn't give advice on which accounts we should choose - that bit is down to us to decide. 

LiquidNitrogen

Thanks for the reply. I don't remember the 12-month thing being obvious at the time, although the full interest balance not being applied until the end of the promotional period (i.e. three months) does ring a bell. I've finally had a nibble on their live chat, from someone who did nothing more than confirm I was asking about my Cash ISA interest, then just said they'd forwarded my query on to the relevant team who would be in touch. Not sure why that took an hour!

Newbie_John

I've had similar case last year - as I need the money I've withdrawn it as quickly as I could and kept the base minimum there which at the time was £100 and waited a year for all the bonuses to arrive - then closed the app and never coming back.

As you've topped up £16k and it's not flexible ISA you're stack till April..
but yeah all is odd there - interest for 1st of July comes at the end of August, bonus year later.. it will add up with time - just really hard to track! And when the year changes to 2026 it will disappear from the app only showing you bonus "earned this 2026 year"  

masonic

The bonus interest should be credited at the end of the promotional period, which is stated in the app ("Calculated daily and paid out after 3 months"). If you opened on 7th April, then it isn't due yet. You don't have to wait 12 months. You should have received interest for April and May by this point. June interest will be credited at the end of this month, whether or not you transfer out in the interim. If you do transfer out during July, the June interest will be the last you receive. You can transfer out in full and they will still keep the empty account open and credit interest, which you can transfer out separately, or withdraw if you can't be bothered to retain ISA status.

Daringly

This thread felt most relevant to what I just observed. I'm pretty much in the same situation as the OP.
Also opened my Plum Cash ISA on 7 April.

I logged in today to see if the bonus interest has been credited, now that it's been three months.

Not only has it not been credited, to my surprise the "Interest breakdown" now says this:

"Bonus interest earned – Calculated daily and paid out after 9 months."

I'm pretty sure this read "3 months" or something like "after the bonus period" when I checked the last time. 

Has Plum just casually changed this or am remembering this wrong?

masonic

Daringly said:

This thread felt most relevant to what I just observed. I'm pretty much in the same situation as the OP.
Also opened my Plum Cash ISA on 7 April.

I logged in today to see if the bonus interest has been credited, now that it's been three months.

Not only has it not been credited, to my surprise the "Interest breakdown" now says this:

"Bonus interest earned – Calculated daily and paid out after 9 months."

I'm pretty sure this read "3 months" or something like "after the bonus period" when I checked the last time. 

Has Plum just casually changed this or am remembering this wrong?

It's a new bonus period. Though I didn't think there is a bonus rate of interest for these 9 months, my rate has updated to 4.49% AER rather than the expected 3.29%, and my "Lifetime interest earned" has increased overnight by the correct daily rate for that. I am currently checking with them if this is really correct.
You should see a future dated transaction in "Activity" with the interest to be credited on the last working day of August.

Daringly

Thanks @masonic, you're right, the Plum support team who got back to me after a few hours has confirmed this, too.

The stated 9 months is now relating to a new bonus rate. This hasn't updated on my app yet (still showing 5.67% – but will probably update soon).

I also don't have the future transaction in my activities yet, but yes, also confirmed by their support team that it's basically the same for bonus interests as with regular interest payout – they credit it at the end of the following month, so 29 August in this case.

I personally find it a bit cheeky to communicate “paid out after 3 months” in the app – but I guess it's technically not wrong and is defined in the T&Cs.

masonic

I suspected the bonus would also be subject to the same strange interest payment delay. Either way, the bonus is earned and will be credited whatever you decide to do. Rather like June's interest.

I'm a day ahead of you, having opened on 6th. Your rate should update tomorrow.

This additional bonus rate makes it harder to decide what to do... I'm tempted to stick out the 9 months now, as I don't want to burn any other introductory offers while offers are generally mediocre. Next April things could be a lot more competitive again.

masonic

I've also now had confirmation via live chat of this new bonus rate, +1.20% AER for 9 months, which applies to those coming off the 3 month offer. Apparently they're currently experiencing a high volume of requests, I wonder how many of them relate to the unexpected 9 month bonus period appearing and confusing folk.

I guess they did not want to lose us 3 monthers. This is certainly a pleasant surprise given the general opinion of Plum and its other practices. Now hopefully they won't slash the rate beyond movements in the base rate over the next 9 months. A 9 month bonus means there is more at stake should they do so in the latter months.

madcatlady5

Thank you- really helpful and detailed information.