Best cash ISA rates this week
Everyone aged over 16 can save up to £11,520 in an ISA during the 2013/14 tax year - of which £5,760 can be saved in cash.
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
- The Post Office Premier Cash Isa (Issue 5) pays a rate of 1.8% AER but this does include a 0.9% bonus rate for the first 18 months. Transactions can be made in branch, by post or over the phone. Transfers in are accepted.
- The Virgin Money Easy-Access Cash Isa (Issue 5) offer a rate of 1.75% AER on minimum deposits of £1. The ISA can be accessed in branch, by post or over the phone and transfers from other Isas are permitted.
- NS&I Direct Isa pays 1.75% AER on balances over £1. It can be managed in branch, by post or over the phone. Transfers in are not accepted, however.
- If you have a larger amount to transfer, consider the First Direct Cash ISA which offers a rate of 2% AER on balances of £40,000+. First Direct is well known for excellent customer service and pays a £125 for transferring your current account business to them.
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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 and accepts transfers in. It can be run online, over the phone or in branch.
- Kent Reliance 60-Day Notice ISA (Issue 6) offers a rate of 1.8% AER on balances of over £1,000. The ISA can be accessed online, in branch or by post.
- The Mansfield BS 30 Day Cash Isa pays a rate of 1.75% AER on balances of over £1. The ISA can be accessed in branch or by post.
FIXED RATE ISAs
- Principality BS Fixed-Rate Cash ISA (Issue 120) offers a rate of 3.05% AER on minimum investments of £500. The ISA can be accessed online, in branch or by post and transfers in from other providers are accepted.
- Virgin Money Fixed-Rate Cash e-ISA (Issue 59) offers a rate of 3% AER on minimum investments of £1. The ISA can be accessed online only and transfers in from other providers are accepted.
- Skipton Online Fixed-Rate ISA pays 3% on minimum balances of £500. The ISA can be managed online only. Transfers in accepted.
- Coventry BS Fixed-Rate ISA (Issue 19) pays 2.75% AER on minimum investments of £5,760. Transfers-in are not permitted and interest is paid annually. The ISA can be accessed in branch, online, by post or over the phone.
- Halifax ISA Saver Fixed offers 2% AER on minimum deposits of £500. Transfers in are accepted and Isas can be managed online, in branch or over the phone.
- Bank of Scotland Fixed Cash Isa pays 2% AER on minimum investments of £500. Transfers-in are permitted and interest is paid annually. The ISA can be accessed in branch or over the phone.
- Virgin Money Fixed-Rate e-ISA (Issue 58) pays savers a rate of 2.4% AER on investments of £1. Transfers-in are permitted and the account can be accessed online only.
- Aldermore 3 Year Fixed-Rate Cash ISA pays 2.25% AER on investments of £1,000. Accounts can be opened by post, phone or online.
- Bank of Scotland Fixed Cash Isa pays a rate of 1.8% AER on minimum balances of £500. Transactions can be made in branch or over the phone. Transfers in from other providers are allowed.
- Britannia Fixed-Rate Cash ISA offers 2.05% AER. It has a minimum deposit of £5,760 and can be opened in branch or by post.
- Santander 2 Year Fixed Rate ISA leads the way with 2% AER, which is only available to existing customers.
- Principality BS Fixed-Rate Cash Isa (Issue 116) pays 2% AER. The ISA can only be accessed online, in branch or by post. Transfers in are allowed and minimum deposit is just £500.
- Post Office Fixed-Rate Cash ISA (Issue 10) offers a rate of 1.9% AER. It requires a minimum investment of £500 and can only be operated in branch, by post or over the phone. Transfers-in from other ISAs are permitted.
- Britannia Fixed-Rate Cash ISA pays a rate of 1.85% AER on minimum balances of £5,760. Transfers in are allowed. Transactions can be made in branch and by post.
- Aldermore Fixed-Rate Cash ISA offers 1.85% AER. The account can be opened with £1,000 and it can be managed online, by post or over the phone. Transfers-in are permitted.
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.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
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.