The improvements made in the Budget were supposed to reinvigorate Cash ISAs, but leading banks and building societies seem to be doing their best to undermine the changes.
Cast your mind back to March. Inflation was falling, making it easier to make a ‘real return’ on your savings and the ISA rules were changed, allowing savers to shelter up to £15,000 each year from the taxman.
There was even talk of interest rates rises!
Fast forward to August. The Bank of England now don’t expect interest rates to rise until next year and the best Cash ISAs are being withdrawn by banks and building societies. In fact, since the ISA changes were introduced on 1st July, 16 banks and building societies, including household names such as Barclays, Tesco Bank and First Direct have all cut their interest rates.
So, if you’re a saver and want the best Cash ISA deal, where do you go? There are still accounts out there where the rates have not been cut, here’s our favourite six.
Instant access – new subscriptions: Coventry Building Society Branch ISA
Paying 2.00%, the Coventry Building Society is top of the pile for instant access Cash ISAs; even better, if you’re an existing customer you can get 2.50%.
There are a couple of drawbacks though, it doesn’t accept transfers from existing Cash ISAs and you have to open the account via a branch. Although as one of the larger building societies, the Coventry has an excellent branch network.
Instant access – transfer: First Direct Cash ISA
This pays 2.00% on transfers in above £40,000, and is available over the telephone or by post.
The rate is attractive, although to get it you need to hold a First Direct current account.
For balances of £20,000 or below, the interest rate drops to 1.70% making the Nationwide’s Flexclusive ISA, paying 1.75%, a better option.
One year fixed rate: Punjab National Bank Fixed Rate Cash ISA
The one year fixed rate Cash ISAs are dominated by some unusual names; the best rate is from the Punjab National Bank.
Hardly a household name, the Punjab National Bank is in fact regulated here in the UK and deposits are protected by the Financial Services Compensation Scheme (FSCS).
The interest rate is 1.90%, although you will have to find a branch to open the account.
If you prefer an account you can open online, take a look at the one year Cash ISAs from United Bank (UK) which pays 1.75% and Tesco Bank , paying slightly less at 1.65%.
Three year fixed rate: United Trust Bank
Many savers are nervous about tying up their capital for too long, fearful that when interest rates do rise, they will be left in an uncompetitive account.
But, in the search for a better return you might be tempted to tie up your savings. If you are transferring an existing Cash ISA, the United Trust Bank three year fixed rate, paying 2.50% is worth a look. You will have to transfer in at least £5,000 and you can open the account in a branch or by post.
If you don’t have a transfer to make but would like to pay a new contribution, take a look at the three year fixed rates from the Clydesdale Bank paying 2.45% and Virgin Money at 2.25%.
Regular saver Cash ISAs: Leeds Building Society ISA Builder
If you don’t have an existing ISA to transfer or a lump sum to put away, a regular saver Cash ISA will help you to get into the habit of saving.
The Leeds Building Society ISA Builder allows you to save from between £1 and £1,500 per month and offers an interest rate of 2.01%, which is fixed until 5th April 2015 when the account will mature; withdrawals are not allowed before then.
The account is easily accessible too, being available online, in a branch or through the post.
Junior Cash ISA : Nationwide Smart Junior ISA
For younger savers the Nationwide Smart Junior ISA is worth a look.
It pays 3.25%, allows up to £4,000 to be put away each year and is available online; perfect for the internet savvy younger generation!
A word of warning though, the rate includes a bonus 1.15%, which comes to an end on 31st January 2014. You will therefore need to look at alternatives early next year when the bonus is withdrawn.
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