Best cash Isa rates this week
Everyone aged over 16 can save up to £15,240 in an Isa during the 2015/16 tax year.
This means all interest you earn in your Isa is free of tax - so a cash Isa should always be the first home for your savings.
Which type of cash Isa do you need?
When picking an Isa, the first thing to decide is whether you want to fix your interest rate or opt for more flexibility with a variable rate.
If you want to secure the interest rate you earn on your savings, and are happy to lock your money away for a set period of time, then a fixed-rate Isa might be for you.
However, if you want to make additional deposits beyond the upfront opening deposit, or make withdrawals, then a variable-rate Isa with easy access is probably more suitable.
EASY ACCESS ISAs
- Coventry Building Society Additional Allowance Isa pays 2.15% AER. The minimum deposit is £1. Accounts can be opened online, on the phone or in branch, though have to be managed by post. Transfers in are not accepted.
- Newcastle BS Big Home Saver Isa (Issue 3) offers a rate of 2.02% AER. Minimum deposit is £1. The Isa can be accessed online, in branch or by post and transfers from other Isas are not permitted.
- Virgin Money Defined Access E-Isa (Issue 2) pays 1.51% AER on balances over £1. It can be managed online only and transfers in are accepted.
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NOTICE ACCOUNTS ISAs
- Clydesdale Bank Cash Isa 40 Day Notice pays a bonus-free 2% AER on balances over £24,000 but does not accept transfers in. It can be run online, over the phone or in branch.
- Hinckley & Rugby BS 120 Day Notice Cash Isa (Issue 2) pays a rate of 1.6% AER on balances of over £500. The Isa can be accessed in branch or by post.
- Dudley BS Cash Isa 30 (Issue 2) offers a rate of 1.45% AER on balances of over £100. The Isa can be accessed in branch or by post.
FIXED RATE ISAs
- Virgin Money Fixed-Rate Cash e-Isa (Issue 134) offers a rate of 2.51% AER on minimum investments of £1. The Isa can be accessed online only. Transfers in from other Isas are accepted.
- Julian Hodge Bank Fixed-Rate Isa pays 2.4% AER on minimum balances of £5,000. The Isa can be managed in branch, by post or over the phone. Transfers in are accepted.
- Skipton Building Society 5 Year Fixed-Rate Isa pays 2.30% AER on deposits of at least £500. The Isa can be managed online, in branch or by post. Transfers in are accepted.
- Julian Hodge Bank Cash 4 Year Isa offers 2.15% AER on minimum deposits of £5,000. Transfers in are accepted and Isa can be managed in branch, by post or over the phone.
- Chelsea Building Society 1.8% Fixed-Rate e-Isa pays 1.8% AER on a minimum deposit of £100. Transfers in are accepted. The account can only be accessed online.
- West Bromwich Building Society 4 Year Fixed-Rate Isa pays 1.75% AER and requires a minimum deposit of £100. Transfers in are accepted. The account can be managed in branch, by post or over the phone.
- Skipton Building Society 3 Year Fixed-Rate has a £500 minimum deposit and pays 2.1% AER. The account can be opened by post, in branch or online. Inbound transfers are accepted.
- Julian Hodge Bank Cash Isa 3 Year pays 2.05% AER but requires a minimum deposit of £5,000. Transfers in are allowed, and there’s no maximum balance. Accounts must be opened in branch or by post.
- Virgin Money Fixed-Rate e-Isa (Issue 131) pays 2% AER. Minimum investment is £1 and the Isa can be accessed online only.
- Halifax Isa Saver Fixed pays 2% AER. The Isa can be accessed online, in branch or over the phone. Transfers in are allowed and the minimum deposit is £500.
- Skipton Building Society 2 Year Fixed-Rate Isa pays 2% AER. There’s a minimum deposit of £500 and the account can be opened online, by post or in branch. Transfers in are accepted.
- Kent Reliance Fixed-Rate Cash NIsa (Issue 17) offers 1.85% AER. It has a minimum deposit of £1,000 and can be opened online, in branch or by post. Transfers in are accepted.
ONE YEAR/18 MONTHS
- Nationwide Building Society Regular Saver Isa offers a rate of 1.9% AER. It requires a minimum investment of £1 and can be operated online or in branch. Transfers-in from other Isas are not accepted.
- Shawbrook Bank Fixed-Rate Cash Isa Bond (Issue 7) pays a rate of 1.75% AER on minimum balances of £5,000. Transfers in are allowed. Transactions can be made online only.
- Virgin Money Fixed-Rate Cash e-Isa (Issue 133) offers 1.71% AER. The account can be opened with £1 and it can be managed online only. Transfers are accepted from other cash Isa providers.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.