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
- Newcastle BS Big Home Saver Isa (Issue 2) pays 2.57% AER on balances over £1. It can be managed online, in branch or by post. transfers in are not permitted. The headline rate includes a 1.00% AER bonus paid to regular savers who make at least one deposit a month. Up to £1,000 cash reward on mortgage completion with the Newcastle.
- Post Office Money Online Isa - Easy Access (Issue 1) offers a rate of 1.5% AER. This includes a bonus rate of 0.85% for the first 12 months. Minimum deposits is £100. The ISA can be accessed online only and transfers from other Isas are 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.
- 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.
To stay up-to-date with latest rates as well as other money-saving and money-making ideas, sign up to our newsletter.
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.
- 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.
- 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
- State Bank of India Cash Isa Fixed Deposit pays 2.5% AER on minimum balances of £5,000. The ISA can be managed in branch or by post. Transfers in are accepted.
- Virgin Money Fixed-Rate Cash e-Isa (Issue 106) offers a rate of 2.25% AER on minimum investments of £1. The Isa can be accessed online or in branch. Transfers in from other Isas are accepted.
- Metro Bank Fixed-Rate Cash Isa offers a rate of 2.25% AER on minimum investments of £1. The ISA can be accessed online or in branch. Transfers in from other cash 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 25) pays 2.25% AER on investments of £1. Accounts can be opened by post, over the phone, in branch or online.
- Julian Hodge Bank Fixed Isa offers 2% AER on minimum deposits of £500. Transfers in are accepted and Isas can be managed in branch or by post.
- State Bank of India 1000 days Cash Isa Fixed Deposit pays savers a rate of 2.3% AER on investments of £5,000. Transfers-in are permitted and the account can be accessed in branch or by post.
- Post Office Money Fixed-Rate Cash Isa (Issue 14) pays 2.1% AER on minimum investments of £500. Accounts can be opened in branch or by post. Transfers in are accepted.
- Virgin Money Fixed-Rate Cash e-Isa (Issue 105) pays a rate of 2% AER on minimum balances of £1. Transactions can be made online only.
- Yorkshire Bank Fixed-Rate Bond (Issue 27) pays 2.1% AER. Minimum investment is £2,000 and the Isa can be accessed in branch only.
- Post Office Money Fixed-Rate ISA (Issue 1) offers 1.95% AER. It has a minimum deposit of £500 and can be opened online only.
- Julian Hodge Bank Fixed-Rate Isa pays 1.9% AER. The Isa can be accessed in branch or by post. Transfers in are allowed and minimum deposit is £5,000.
ONE YEAR/18 MONTHS
- United Bank UK Fixed-Rate Cash Nisa offers a rate of 1.65% AER. It requires a minimum investment of £2,000 and can be operated in branch or by post. Transfers-in from other ISAs are accepted.
- Virgin Money Fixed-Rate Cash e-Isa (Issue 109) pays a rate of 1.65% AER on minimum balances of £1. Transfers in are allowed. Transactions can be made online only.
- 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.