Best cash ISA rates this week
Everyone aged over 16 can save up to £15,000 in an ISA during the 2014/15 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
- BM Savings Isa Extra (Issue 12) pays a rate of 1.6% AER on a minimum balance of just £1, this includes a bonus of 1.1% bonus for the first 12 months. The Isa can be opened online, by post or over the phone. Transfers in are accepted.
- Post Office Premier Cash Isa (Issue 7) pays 1.55% AER on balances over £100, however this includes a 0.8% bonus for 18 months. It can be managed in branch or by post. Transfers from other Isas are accepted.
- Skipton BS Online Bonus Cash Isa (Issue 3) offers a rate of 1.5% AER this includes a 0.25% bonus for the first 12 months. Minimum deposits is £1. The ISA can be accessed online only and transfers from other Isas are not permitted.
- 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 £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.
- Teachers BS Cash Isa Notice 90 (issue 4) offers a rate of 1.65% AER on balances of over £100. The ISA can be accessed by post only.
- Beverley BS 30 Day Cash Isa pays a rate of 1.5% 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 132) offers a rate of 2.5% AER on minimum investments of £500. The ISA can be accessed online, by post or in branch. Transfers in from other providers are accepted.
- Skipton BS Fixed-Rate Isa (Issue 3) offers a rate of 2.5% AER on minimum investments of £500. The Isa can be accessed online only and transfers in from other Isas are accepted.
- Julian Hodge Bank Fixed Isa pays 2.5% AER on minimum balances of £5,000. The ISA can be managed in branch or by post. Transfers in are accepted.
- Coventry Fixed-rate Cash Isa (Issue 23) pays 2.6% AER on investments of £1. Accounts can be opened by post, over the phone, in branch or online.
- Nationwide BS Fixed-Rate Cash Isa pays 2.2% AER on minimum investments of £1. Transfers-in are permitted and interest is paid annually. The ISA can be accessed in branch only.
- TSB Fixed-Rate Isa offers 2.% AER on minimum deposits of £3,000. Transfers in are accepted and Isas can be managed online, in branch or by phone.
- Virgin Money Fixed-Rate E-Isa (Issue 90) pays 2.25% AER on investments of £1. Accounts can be opened online only. Transfers in accepted.
- Skipton BS Fixed-Rate Isa pays a rate of 2.2% AER on minimum balances of £500. Transactions can be made in branch, by post or online.
- Bank of Cyprus Loyalty Fixed-Rate Isa pays savers a rate of 2% AER on investments of £500. Transfers-in are permitted and the account can be accessed in branch, by post online or over the phone.
- Virgin Money Fixed-Rate Cash E-Isa (Issue 93) pays 2.1% AER. Minimum investment is £1 and the Isa can be accessed online only.
- Kent Reliance Loyalty Flexible Fixed-Rate Nisa (Issue 5) offers 2.1% AER. It has a minimum deposit of £1,000 and can be opened in branch, online or by post.
- Barclays Flexible Cash Isa (Issue 4) pays 2.02% AER. The Isa can be accessed in branch, online or over the phone. Transfers in are allowed and minimum deposit is £1.
ONE YEAR/18 MONTHS
- Post Office Fixed-Rate Cash Isa (Issue 13) pays a rate of 1.7% AER on minimum balances of £500. Transfers in are allowed. Transactions can be made by post or in branch.
- Tesco Bank Fixed-Rate Cash Isa offers a rate of 1.65% AER. It requires a minimum investment of £1 and can be operated online or over the phone. Transfers-in from other ISAs are accepted.
- Julian Hodge Bank Fixed-Rate Isa offers 1.65% AER. The account can be opened with £5,000 and it can be managed in branch or by post. 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.