Find out our recommendations for the best accounts for new money, where to transfer your existing cash ISA to, and how to avoid those sneaky fees and conditions.
It's March, and hot topic of the moment is ISAs. After all, there's less than a month to go before we lose our 2006/7 ISA allowance, so we have to be quick if we want to stash/invest our cash, tax free.
The trouble is, there were 190 different cash ISA products on the market at the end of February, according to Moneyfacts, and more have been added since. So how can you find the account that best suits your needs?
Cash ISAs used to be relatively simple -- you knew that anyone aged 16 or over could save up to £3,000/year, tax free, so it was a case of picking the best paying account, and stashing your cash.
Unfortunately things have changed. Providers now battle to get their account at the top of the tables and offer fantastic rates to do so. Unfortunately with many, when you look beneath the veneer you can find notice periods, fees, bonus periods that revert to unexciting rates in short amounts of time and other sneaky terms and conditions.
What's more, as cash ISAs have been around for a while now, many of us have existing accounts from previous years that we may want to transfer -- but unfortunately, many are open to new money only.
So anyway, if you've been struggling to find a high paying account to transfer your existing ISA(s) to, or you simply want to open a new cash ISA, I've dredged through them all to find the best buys.
Existing ISAs
First things first, if you signed up for a fantastic cash ISA six or more months ago, make sure you know what your money is earning now. Providers are very fond of reeling us in, grabbing our cash and then conveniently forgetting to raise their rates when interest rates go up. If your cash is earning less than the base rate (currently 5.25%), it's time to transfer it.
And as regular readers will know, I'm not a fan of great savings rates that are artificially buoyed by short term bonuses, or accounts that penalise you for withdrawing your money. So here are the best instant access accounts for those wishing to transfer an existing ISA (with no penalty for transferring money out again).
Top, Instant Access Accounts for Existing ISAs
Provider | Account | Rate/ | Min-Max investment | Rate guaranteed? | Accessed / |
|---|---|---|---|---|---|
Kent Reliance BS | Direct Mini-cash ISA | 5.71% | £1-£24k | No | Post. Interest must be compounded. |
Bradford & Bingley | eISA | 5.55% | £1k - £24k | Will at least match BoE base rate until 30.6.08 | Internet. Must be 18 or over. Interest can be paid away or compounded. |
National Counties BS | Cash Mini Isa Issue 2 | 5.51% | £1 - £33k | No | Branch, Post, Phone. Interest must be compounded. |
Skipton BS | Mini Cash ISA | 5.50% | £50-£33k | Rate guaranteed to be no lower than 1% below base rate | Branch. Interest can be paid away or compounded. |
Leek BS | Mini Cash ISA | 5.50% | £1 - £33k | No | Branch. Interest can be paid away or compounded. |
Source: Moneyfacts
New Money
Alternatively, if you're looking to open an ISA with new money, here are the best, straight-paying instant access accounts available right now, again with no penalty for transferring money out in the future:
Top, Instant Access Cash ISAs for New Money
Provider | Account | Rate/ | Min-Max investment | Rate guaranteed? | Accessed/ |
|---|---|---|---|---|---|
National Savings and Investments | Direct ISA | 5.80% | £1k-£3k | Rate guaranteed to be 0.55% above Base Rate to 5.4.08. | Internet/phone. Min. addition/withdrawal £250. Transfers permitted from NS&I ISAs. Interest must be compounded. |
Kent Reliance BS | Direct mini-cash ISA | 5.71% | £1-£24k | No | Post. Interest must be compounded. |
Yorkshire BS | e-ISA | 5.65% | £10-£15k | Guaranteed to be no more than 1% below base rate | Internet. Interest must be compounded. |
Bradford & Bingley | eSavings ISA | 5.60% | £1k - £24k | Will at least match BoE base rate +0.25% until 30.6.08 | Internet. Must be 18 or over. Interest can be paid away or compounded. |
National Counties BS | Cash Mini Isa Issue 2 | 5.51% | £1 - £33k | No | Branch, Post, Phone. Interest must be compounded. |
Source: Moneyfacts
Now I know a lot of people will be reading this and wondering where the account with the headline grabbing rate they'd seen advertised is hiding. As mentioned previously, some providers like to launch products with fantastic rates, with the aim of grabbing a lot of new business.
Unfortunately, a lot of people that sign up fail to realise that the great rate comes with a bunch of terms and conditions regarding withdrawals, or includes a short term bonus. Sign up and you could find yourself having to move that cash again in six months, when the rate on the account reverts to something very unexciting.
Of course, these types of account may be perfect for those needing to get at their cash in this sort of time frame, or those willing to leave their money untouched for long periods. I've therefore included a third table, with the best rates for those not requiring instant access to their cash, and willing to put up with a few conditions.
Top Paying Cash ISAs with Conditions
Provider | Rate/ | Min-Max | Transfers in? | Access | Rate guarantees |
|---|---|---|---|---|---|
Alliance & Leicester: Premier ISA (apply via the Fool) | 8.10% | £1-£3k | No | Instant access | Rate includes 2.00% bonus until 30.4.2008. Rate guaranteed to be at least 1.00% above Base Rate until 30.4.08, reverting to 0.25% below Base Rate from 1.5.08. |
| Conditions/Penalities: Must be 21 or over. Must open a Premier Current account at the same time. No A&L current account can have been held in last 3 months. | |||||
Abbey: Super ISA | 8.00% | £500-£33k | Yes | Instant access | Reverts to Direct ISA rate from 1.5.08. |
| Conditions/Penalities: Must also invest an equal amount in Abbey's Guaranteed Growth Plan | |||||
Scarborough BS: Guaranteed ISA | 6.10% | £1k-£24k | Yes | 30 day notice | On maturity transfers to variable rate Mini Cash ISA. Rate fixed to 31.3.08, then 5.50% to 31.3.09. |
Halifax Fixed Rate ISA saver (4 year bond) | 6.00% | £3k-£33k | Yes | Earlier access on closure only on 30 day notice + 180 day loss of interest. | 1 year fixed 5.5%, 2 year 5.6%, 3 year 5.7%, 4 years 6%AER. |
Ing Direct Cash ISA | 6.00% | £1-£3k | No | Instant access | Rate includes 1.42% bonus guaranteed for 6 months, then reverts to variable cash ISA rate(currently 5.13%) equivalent to 6%AER. |
| Conditions/Penalities: Interest must be compounded. | |||||
Source: Moneyfacts
It's worth noting that although anyone aged 16 or over should be able to open a cash ISA, a number of the accounts do specify that applicants must be 18, or even 21 to qualify for their offering.
Finally, it's worth pointing out why accounts such as the Portman BS 15 Day Notice ISA and Saffron BS 30 day Mini Cash Tracker ISA have not featured. Although they are both advertised as paying 6.05%, this is the gross rate, and rates featured in the above tables are the annual equivalent rate (AER) which in this case is 5.65%. Both of these accounts also slap on what I consider to be an unfair £30 administration fee, should you wish to transfer your money to another provider.
So there you have it, a run down of the best cash ISAs on the market at the moment for those wishing to transfer existing funds, or save new money. So don't hang about -- use up that allowance before 5 April or it'll be lost forever.
> Find out more in our ISA Centre.
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