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
- 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.
- NS&I Direct Isa pays a rate of 1.5% AER on a minimum balance of just £1. The Isa can be opened online or over the phone. Transfers in are not accepted.
- Virgin Money Defined Access E-Isa pays 1.41% AER on balances over £1. It can be managed online only and transfers in are accepted.
- If you have a larger amount to transfer, consider the First Direct Cash ISA which offers a rate of 1.5% AER on balances of £30,000+. 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 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 offers a rate of 1.5% AER on balances of over £100. The ISA can be accessed in branch or by post.
FIXED RATE ISAs
- State Bank of India Cash Isa Fixed Deposit offers a rate of 2.5% AER on minimum investments of £15,000. The ISA can be accessed online only. Transfers in from other cash Isas are accepted.
- Skipton BS Fixed-Rate Isa pays 2.3% AER on minimum balances of £500. The Isa can be managed online, in branch or by post. Transfers in are accepted.
- United Trust Bank Cash Isa Deposit Bond offers a rate of 2.3% AER on minimum investments of £5,000. The Isa can be accessed by post only. Transfers in from other Isas are accepted.
- Punjab National Bank Fixed-Rate Isa pays 2.5% AER on minimum investments of £1,000. Transfers-in are permitted and interest is paid annually. The ISA can be accessed in branch only.
- Coventry Fixed-Rate Cash Isa (Issue 27) pays 2.1% AER on investments of £1. Accounts can be opened by post, over the phone, in branch or online.
- Julian Hodge Bank Cash Isa offers 2% AER on minimum deposits of £5,000. Transfers in are accepted and Isa can be managed in branch, by post or over the phone.
- State Bank of India Cash Isa Fixed Deposit pays 2.1% AER on minimum investments of £15,000. Accounts can be opened online only. Transfers in are accepted from other Isas.
- Metro Bank Fixed-Rate Cash Isa pays a rate of 2% AER on minimum balances of £1. Transactions can be made in branch, by post over the phone.
- Nationwide Fixed-Rate Isa pays savers a rate of 2% AER on investments of £50. Transfers-in are not permitted and the account can be accessed in branch or online.
- 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.
- Shawbrook Bank Fixed-Rate Isa Bond (Issue 8) pays 1.85% AER. The Isa can be accessed online only. Transfers in are allowed and minimum deposit is £5,000.
- Post Office Money Fixed-Rate Issue 2 pays 1.8% AER. Minimum investment is £500 and the Isa can be accessed online only.
ONE YEAR/18 MONTHS
- Shawbrook Bank Fixed-Rate Cash Isa Bond (Issue 6) pays a rate of 1.65% AER on minimum balances of £5,000. Transfers in are allowed. Transactions can be made online only.
- Nationwide Fixed-Rate Isa offers a rate of 1.65% AER. It requires a minimum investment of £1 and can be operated online or in branch. Transfers-in from other ISAs are accepted.
- Post Office Online Isa Fixed-Rate (Issue 2) offers 1.61% AER. The account can be opened with £500 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.
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.