Best cash Isa rates this week

Everyone aged over 16 can save up to £15,240 in an Isa during the 2016/17 tax year.

The benefit of an Isa is that all the interest you earn is free of tax, which is why it should usually be your starting point for savings. 

The 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.

However, wrapping your money in an Isa means you don't need to worry about a future tax bill because your savings have grown, or if better rates become available.  

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, 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.

If you're looking for a savings account to save a deposit for your first property, you might be benefit from a Help to Buy Isa. See our top Help to Buy Isas guide.  

Remember, savings with UK banks are covered by the Financial Services Compensation Scheme (FSCS), so deposits up to £75,000 with any institution are protected by the UK government. If two banking brands (for example, NatWest and RBS) share a banking licence, the £75,000 guarantee is shared across the two brands.

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.

Find the best Cash Isa or savings account for you

EASY ACCESS ISAs

  • First Direct customers can get 1.3% AER on balances over £1 with its Cash Isa. It’s available over the phone, by post and online. You can transfer money in, but not from a First Direct Isa. 
  • HSBC pays existing Premier customers 1.3% AER on its loyalty Isa. The account is available in branch, by post, over the phone or online. The rate will fall to 0.5% if savers don’t make at least one deposit each year. It also pays 1.2% AER to HSBC customers with an advance account.
  • Coventry Building Society’s Easy Access Isa (Issue 4) pays 1.1% AER. Accounts can be opened with £1, and there’s no maximum balance. The account is available in branch, by post or over the phone. 

 

 

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NOTICE ACCOUNT ISAs

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

  • Clydesdale Bank Cash Isa 40 Day Notice pays a bonus-free 1.75% AER on balances over £30,000 but does not accept transfers in so you won’t receive the full rate unless you split your deposit across two Isa seasons. Instead, you'll get 1% between £500 (minimum deposit) and £15,000, and 1.5% between £15,000 and £30,000. You can open an account online, by phone, by post or in branch, but you’ll have to manage the account in branch or by post. The same terms are available with Yorkshire Bank too.
  • Hinkley & Rugby Building Society: 120 Day Notice Cash Isa pays 1.2% AER on balances over £500. Account balances must be between £500 and £300,000. New customers can sign up in branch or by post. 
  • National Counties Building Society’s 45 Day Notice Account pays 1.15% AER on balances over £30,000, with no upper limit. It’s available in branch, by post, online or over the phone. The minimum balance is £3,000, which will earn 0.9% interest. Balances over £15,000 earn 1%. 

 

FIXED RATE ISAs

FIVE YEAR

  • If you’re transferring an existing Isa, United Trust Bank UK pays 1.75% AER. It will not accept money that’s not already in an Isa account, though in theory you can get around this by opening an account elsewhere and then transferring your savings to United Trust Bank. However, the account is only available by post and the rate could be cut in the meantime. The minimum balance is £5,000, with no upper limit.
  • Shawbrook Bank’s 5 Year Fixed Rate Cash Isa (Issue 3) pays 1.7% AER. Savers can deposit between £5,000 and £250,000, and transfers are accepted from other accounts. The account is online only. Early withdrawals and closures forfeit 360 days’ interest. 
  • Skipton Building Society’s 5 Year Fixed Rate Isa pays 1.60% AER on balances between £500 and £1,000,000. The account is available in branch, by post and online. You can’t withdraw money early, but you can close the account if you’re willing to forfeit a year’s interest. 

 

THREE / FOUR YEAR

  • Shawbrook Bank’s 3 Year Cash Isa Bond (Issue 8) pays 1.5% AER. There’s a £5,000 minimum deposit and you can save up to £250,000. You can transfer money from other Isas. The account is only available online. Early withdrawals are allowed but will lose 9 months’ interest.
  • Paragon Bank’s 3 Year Fixed Rate Cash Isa pays 1.5% AER on balances over £500. The maximum balance is £100,000. The account is online only, and transfers are allowed within 30 days of opening the account. Early access will forfeit 270 days’ interest.
  • Julian Hodge Bank’s 4 Year Cash Isa pays 1.4% AER on balances over £5,000, with no upper limit. Accounts can be opened in branch or by post. You can’t make withdrawals during the term, but can close the account early if you’re willing to forfeit six months’ interest. 

 

ONE / TWO YEAR

 

JUNIOR ISAS

  • Coventry Building Society’s Junior Cash Isa will pay 3.25% AER. Accounts can be opened with a pound in branch, online or by post. Interest is paid annually on 30 September.
  • Nationwide’s Smart Junior Isa also pays 3% AER. Again, the minimum opening balance is £1. It’s only available in branch. Interest is paid annually on 31 October. 
  • The Halifax Junior Cash Isa pays 3.00% AER. Transfers in are accepted and the minimum balance is £1. It’s only available in branch.  

 

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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