When you use an investment platform it’s primarily to invest in stock market-based assets. But there’s also a good chance you’ll have cash holdings on your platform – and an even better chance that you’re being paid very little interest on that cash.
The interest that platforms pay on cash holdings was for many years an overlooked issue, as interest rates were so low that it didn’t really matter. But with inflation and interest rates remaining relatively high over the past couple of years, cash can quickly lose value to rising prices. So, if you’ve got cash on your platform, you’d like to think that it’s earning some decent interest. Unfortunately, however, it probably isn’t. Let’s take a closer look.
Why hold cash on a platform?
There are several reasons why you’d have a cash balance on your platform. For example, it can help you cover regular fees and charges, while cash provides liquidity to avoid having to sell invested assets. Or it might be there simply because you pay into your account monthly by direct debit or standing order, but the money hasn’t yet been allocated to a fund or investment.
A fifth of ordinary investors using platforms told a 2024 Financial Conduct Authority (FCA) that they held cash on their platform so they had quick access to it in the event of needing it. Another 13% said it was to earn interest, and the same percentage again said it was to reduce risk in their overall portfolio.
What does the regulator think?
The FCA has expressed concerns about the way platforms deal with cash balances. In 2023 it found that most platforms and Sipp operators keep at least some of the interest they earn on customers’ cash balances, at an average of 50% of that interest, while six in 10 also charge a platform fee on the cash held (a practice referred to as ‘double dipping’). Last year it said platform cash would be an area of focus when looking at whether customers were getting value for money.
Which platforms pay the most?
Interest on cash is usually a flat rate regardless of the amount held, but a growing number of platforms take a tiered approach. This makes direct comparison tricky, as it depends on how much cash you hold. AJ Bell’s Dodl platform is the most generous among the traditional names, paying 4.06% interest on uninvested ISA cash. Among the big players, Bestinvest pays 3.23% on cash held in any accounts (including ISAs and Sipps) and AJ Bell pays 2% on all cash balances in ISAs, 3.4% on cash balances in drawdown Sipps and 2.65% on other Sipp cash balances.
Interactive investor pays up to 2.78% and 2.43% on £100,000+ Sipp and ISA cash balances respectively and Hargreaves Lansdown pays up to 3.4% and 2.78% respectively on the highest Sipp and ISA balances. With Fidelity you’ll get 2.48% on cash held in an ISA account and 2.53% on cash in your Sipp.
Some of the most competitive rates are paid by the 0% commission brokers that have become a feature of the market in recent years. For example, Freetrade pays 5% on up to £3,000 uninvested cash for customers on its £11.99 a month plus plan, eToro pays 4.05% on total cash balances over $50,000 and 3.25% on balances up to that and Trading 212 pays 4.05% interest on any uninvested cash.
And which pay the lowest rates?
When it comes to interest on uninvested cash, the stingiest platforms include iWeb, which pays 3% on uninvested Sipp cash but nothing on ISA balances, and Vanguard, with a flat 1.95% on cash held in its Sipp or ISA. Charles Stanley’s highest interest rate is 1.9% on the biggest ISA and Sipp cash balances.
What else do they offer cash savers?
Many platforms offer cash ISAs, while some now direct investors to services designed specifically for cash accounts. Hargreaves Lansdown, interactive investor and AJ Bell all offer standalone cash savings platforms that allow customers to apply for savings accounts from different banks and building societies. The interactive investor service is provided by Flagstone, which takes a 0.25% management fee that’s reflected in the rates offered through the service.
How much interest can I get on normal savings accounts?
While the Bank of England has cut the base rate in 2025 – taking it to 4% at the time of writing – there’s still several easy access and cash ISA accounts available paying around 4.5% to 5%, while several regular savings accounts pay 7% or more (though you usually need to have a current account with the provider). If you’re happy for your cash to be locked away for a set number of years, several fixed-rate savings accounts or bonds can offer generous returns.
Conclusion
Traditional savings accounts generally remain the best option if you want to earn a decent amount of interest on your cash. If you tend to maintain a significant cash balance with your platform, it’s worth checking if it offers a savings service and/or a linked cash ISA – these will almost certainly give you more interest on your cash than leaving it uninvested on the platform.
If you keep a decent amount of cash on their platform but don’t like how little interest is paid on it, it might also be time to compare platforms. While the cash interest rate alone might not be a reason to move, running your own comparison using our free comparison tools will help you find a platform that suits your overall preferences, needs and circumstances.
Photo by Joachim Schnürle on Unsplash
