Savings rates crunch: where to find good Cash Isa rates

9 September 2019

Savings rates are falling but there are still some good deals out there

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Things are not going well for savers at the moment with lenders currently slashing rates across the board and withdrawing products.

We have recently seen National Savings and Investments (NS&I) drop a number of its bonds and cut interest rates for its 1.5 million account holders.

Marcus by Goldman Sachs, which has been at the top of the easy-access best buy accounts for the past year, has seen its rate cut down to 1.45% from 1.50%. Virgin Money has also dropped its easy-access rate from 1.50% to 1.43%.

More woe is potentially on the horizon, with most experts predicting that the Bank of England will cut interest rates in the event of a no-deal Brexit.

This could possibly be up to 0.75%  in the worst-case scenario and is likely to be passed on to savers who are already getting below-inflation returns.

One-year Cash Isas

One-year Cash Isas are good for savers looking to get a return on their money whilst not having to lock it away for a great length of time.

The current best buy Cash Isa from Al Rayan Bank pays 1.61% and requires an initial £1,000 deposit.

It beats the 1.56% from on offer from Cynergy Bank which requires a £500 deposit.

When Moneywise first published this article on Monday 9 September, Charter Savings Bank had a best buy one-year deal of 1.62%, but in less than 24 hours since publicising the account the bank had to pull it, demonstrating just how much demand there is for a top rate at the moment. 

Andrew Hagger, a personal finance expert at Moneycomms, says: “Unfortunately, Isa rates have mirrored the wider savings market with rates drifting lower during the last couple of months.

“Mortgage competition is fierce with banks and building societies lowering borrowing rates to stay competitive - the bad news for savers is that deposit rates have also been cut as a result, in order to preserve profit margins.

“Standard savings rates are still more attractive than Isa rates so unless you are in danger of exceeding your Personal Savings Allowance then Isa's aren't the best home for your cash.

“The best one-year savings bond from Gatehouse Bank pays 1.95% - that's an extra £66 per year income on a £20,000 balance.”

Easy-access

If you don’t want to lock away your money you might want to consider an easy-access Cash Isa.

However, while you will be able to make withdrawals they generally come with lower rates.

Coventry Building Society has launched a market-leading Cash Isa at a rate of 1.44%. The rate includes a fixed bonus of 0.29% paid until 31 January 2021.

It beats the rate of 1.43% on offer from Shawbrook Bank and Virgin Money.

However, with Coventry’s Cash Isa you can only make three withdrawals per calendar year, whereas with Shawbrook’s Isa you can get hold of your money whenever you want. With the Virgin product you can make two withdrawals a year.

Beating inflation

For those who want a Cash Isa above the current rate of inflation of 1.9%, you are going to have lock your money away for five years.

The current best buy five-year Cash Isa is from Metro Bank and gives you a return of 2.1%.

Just below this, Family Building Society and Hodge Bank both have rates of 2% for their five-year Isa products.

For regular updates on the best savings accounts and Cash Isas, Moneywise maintains weekly-updated lists of the best buy products selected according to rates and other features of the accounts.

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