Best cash Isa rates this week

The personal savings allowance means basic rate taxpayers can earn £1,000 interest tax free without using their Isa, and people who pay the 40% rate can get £500.

But remember that wrapping your money in an Isa means you won't need to worry about a future tax bill because your savings pot has grown and you're earning more than the tax-free threshold.

Everyone aged over 16 can save up to £15,240 in an Isa during the 2016/17 tax year. This allowance will increase to £20,000 in the 2017/18 tax year.

The main reason not to use an Isa for your savings is if doing so will eat into the amount you could put into an investment Isa, where the tax relief could save you far more tax, as your investments are likely to grow faster.

Find the best cash Isa or savings account for you

EASY ACCESS ISAs

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 make additional deposits beyond the upfront opening deposit, or make withdrawals, then a variable rate Isa with easy access is probably most suitable for you.

Paragon Bank Limited Edition Easy Access Cash Isa 1.05% AER
Accounts can be opened with £1, up to £100,000. The account is available online only. Transfers in from other cash Isas are permitted.

Coventry Building Society Easy Access Isa 1.05% AER
This account accepts transfers in from other accounts and you can operate it in branch, by post and over the phone. Minimum balance is £1.

NOTICE ACCOUNT ISAs

Notice accounts need you to plan withdrawals in advance, but the rates can be higher than those offered by instant access. Be aware these products are more likely to offered tiered rates, so the interest you get depends on your account balance.

There are currently no notice account Isas paying more than the easy access accounts listed above.

FIXED RATE ISAs

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, a fixed rate Isa might be for you.

ONE YEAR

Bank of Cyprus UK One Year Fixed Rate Isa 1.1% AER
Can be opened with £500 and transfers from other Isa providers are accepted. Rate is fixed for 12 months and the account is online only. Savings here receive the full £85,000 FSCS protection.

Virgin Money Fixed Rate Cash Isa (Issue 254) 1.05% AER 
Available for balances between £1 and £2 million. It’s available by post, phone, online or in branch. You can transfer money from other Isas, but be aware this can only be done within 30 days of account opening.

TWO YEAR

Principality Building Society Two Year Fixed Rate Cash Isa (Issue 167) 1.26% AER 
This product offers a 1.26% rate, fixed for two years. The account can be opened in branch, online or by post for balances above £500.

Paragon Bank Two Year Fixed Rate Isa 1.2% AER
This offers a 1.2% rate on balances between £500 and £100,000. Account can only be opened online and any transfers from other Isas must be completed within 30 days.

THREE YEAR

Paragon Bank Three Year Fixed Rate Isa 1.4% AER
This three year fix offers a rate of 1.4%. This account can only be opened online for balances between £500 and £100,000

Principality Building Society Three Year Fixed Rate Isa (Issue 166) 1.3% AER
This offers a rate of 1.3%, fixed for three years, on balances of more than £500. Operated in branch, by phone and online.

Skipton Building Society Three Year Fixed Rate Isa 1.3% AER
This deal is fixed for three years for balances over £500. The account can be opened in branch, online or by post.

FIVE YEAR

United Trust Bank Five Year Cash Isa (Transfers In) 1.85% AER
This pays 1.85% but there are restrictions. This is only for transfers in and no new cash is allowed. You must also transfer over at least £5,000.

Paragon Bank Five Year Fixed Rate Isa 1.75% AER
This five year fix offers a rate of 1.75%. This account can only be opened online for balances between £500 and £100,000

JUNIOR ISAS

If you're looking to put some cash aside for your kids, Junior Isas are a great way of doing so. These accounts are available to anyone under 18 and tend to offer much higher rates than adult accounts, but there are some restrictions. Read Moneywise's guide to Junior Cash Isas to find out more.

Coventry Building Society Junior Cash Isa 3.25% AER
Accounts can be opened with a pound in branch, online or by post. Interest is paid annually on 30 September.

Halifax Junior Cash Isa 3% AER
Transfers in are accepted and the minimum balance is £1. This account is only available in branch, however.  

Nationwide Smart Junior Isa 3% AER
Also pays 3% AER. Again, the minimum opening balance is £1. It’s only available in branch. Interest is paid annually on 31 October. 

Tesco Junior Cash Isa 3% AER
Open this account with as little as £1. Tesco's Junior Cash Isa can be accessed online and over the phone

TSB Junior Cash Isa 3% AER
This branch-only account also offers a 3% rate of interest for young savers and accepts transfers from other accounts.

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HOW ARE THESE PRODUCTS PICKED?

We look across as much of the of the savings market as possible to find the best deals using industry data from Defaqto.

All our picks are nationally available. We try and pick products that are available to both new and existing customers, but we’ll highlight some offers for existing customers if they’re much better than what else is on offer.

Unless rates are significantly higher than on other accounts, we avoid products that pay an initial bonus (which is normally a euphemism for a rate cut after 12 months), or those with tiered rates (these may not pay the advertised interest rate if your balance rises above or falls below a set amount).

All these savings accounts are covered by the FSCS unless otherwise specified. If your bank is licenced by another European country, savings up to €100,000 will be protected, but by the government where the bank is headquartered, rather than the UK authorities.

We will never include a savings account that isn’t covered by a European deposit protection scheme.

To see all the savings accounts we consider, visit our savings and Isa comparison tools.

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