Cash ISAs: The super six

Posted on February 24th, 2017 | Categories - Savings

Cash ISAs: The super sixInterest rates on Cash ISAs remain historically low, and with current inflation rates, the true value of your savings may fall.  Despite this, and the introduction of the Personal Savings Allowance, which will mean far fewer people pay tax on their savings interest, Cash ISAs are still a popular way to save. Especially for those people who want to avoid the risks associated with stock market investments or, who are saving for short-term needs.

As we approach the end of the tax-year, thoughts often turn to making ISA contributions, before the £15,240 allowance is ‘lost’.

We’ve looked for the best rates available for new customers in each category, from banks and building societies who serve the whole of the country and are registered with the Financial Services Compensation Scheme.

Rates are correct at time of writing, but may be subject to change.

Variable rate ISAs

Variable Cash ISAs can look relatively attractive. But remember, rates can go up and down. Some of the higher paying accounts come with catches such as notice periods and limited withdrawals.  Watch out for bonus rates that mean good returns to start with, but may leave you with an uncompetitive rate when they come to an end.

1. Best easy access Cash ISA: Paragon Bank 1.05% Limited Edition Easy Access cash

Easy access Cash ISAs mean you can take out your money when you want, without penalty.

The Limited Edition Easy Access Cash ISA from Paragon Bank pays 1.05% and you can open it with just £1.

2. Best notice Cash ISA: Secure Trust Bank 1.20% 120 Day Notice Account

As the name suggests, this type of account means you need to give the bank or building society a pre-set number of days notice.

You need £1,000 to open the account which can be managed by telephone or post, and give 120 days advance notice of withdrawals.

3. Best regular saver Cash ISA: Hanley Building Society 1.15% Cash ISA Regular Saver

Regular saving can help you build your ISA pot. But remember that with regular savers, all except your first payment is only in for part of the year, so the return at the end of the year may be less than you expect.

Hanley Building Society is a small local society, but they provide a postal as well as a branch service, allowing savers from across the UK to open a Cash ISA.

Fixed rate ISAs

To get the predictability of a fixed rate, you will probably need to lock your savings away for a set period of time. Cash ISA providers may allow you access to your money, if you need it, though most will charge heavy penalties.

4. Best fixed rate ISA – One year: Al Rayan Bank 12 Month Fixed Term Deposit Cash ISA 1.09%

Al Rayan Bank is a UK-registered bank and their 12-month Fixed Term ISA pays 1.09% per year. You can open the account online and the minimum needed is £1,000. They are not well known, but are full members of the UK Financial Services Compensation Scheme (FSCS).

5. Best fixed rate ISA – Two years: Darlington Building Society 1.25%

Darlington is a smaller Building Society, but allows their accounts to be opened by savers anywhere in the UK.

Interest is paid annually. If you need access to your savings during the fixed rate period, this is possible, subject to a withdrawal penalty of 180 days’ loss of interest.

6. Best fixed rate ISA Five Years – Virgin Money 5-year Fixed Rate Cash ISA 1.65%

If you want the certainty of a five-year fixed rate, the option currently paying the highest rate of interest is from Virgin Money.

This account however is a limited issue, so you may be advised to move swiftly. Withdrawals are subject to a charge equivalent to 180 days’ loss of interest.

We are here to help

If you have any questions about this article, or would like to discuss your savings options with us, please do not hesitate to get in touch.

We are here to help, please call us on 0115 933 8433.

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