Let's take a look at how the Cash ISA offerings out there now compare to the start of the tax year six months ago.
We’re approaching the halfway point of the tax year, so that means there’s six months left if you want to use your ISA allowance for 2013/14. Any of the £5,760 Cash ISA allowance you haven’t used by then will be gone forever.
The bad news is that rates haven’t improved since the start of the tax year. In fact, they’ve got worse.
For example, Nationwide has cut the interest on its two market-leading Cash ISAs since the start of the tax year. The Flexclusive ISA, which is only available to current account holders, was paying 2.50% but now only pays 2.00%. Meanwhile, the Easy Saver ISA was paying 2.25% but is now paying 1.75%.
Several top-paying ISAs were also quickly fully subscribed and withdrawn at the beginning of the tax year. These included Coventry Building Society’s Poppy ISA, which was paying 2.60%, and Santander’s two-year Major ISA, paying 3% to existing customers and 2.80% to new customers.
[SPOTLIGHT]In common with all savings accounts, the combination of the record low Bank of England base rate and the cheap money available to banks and building societies via the Funding for Lending scheme has driven Cash ISA rates down.
However, if you prefer to save in cash there are still some strong arguments for opening one. The first is they are tax free. The second is once you’ve opened an ISA for this tax year you can transfer your savings from it in future years once rates have improved. But you might have to wait a little while...
Top instant access and short-term notice ISAs
If you want the option of being able to access your money easily, then these are the top ISAs offering either instant access or a short notice period.
|
Account |
Interest Rate (AER) |
Minimum deposit |
Bonus |
Notes |
|
Nationwide Flexclusive ISA |
2.25% |
£1 |
1% bonus until December 2014 |
New subscriptions only, must hold Nationwide current account. |
| Nottingham BS 60-Day Access ISA | 2.10% | £10 | None |
New subscriptions only. 60 days’ notice required for withdrawals. |
|
Melton Mowbray BS 100-Day Notice Cash ISA |
2.10% |
£1,000 |
None |
New subscriptions only. 100 days’ notice required for withdrawals. |
|
Tesco Bank Instant Access Cash ISA |
2.00% |
£1 |
None |
New subscriptions only. |
|
Bank of Cyprus UK 35-Day Cash ISA |
2.00% |
£500 |
None |
Transfers and new subscriptions. 35 days’ notice required for withdrawals. |
|
Newbury BS Notice Cash ISA |
2.00% |
£5,000 |
None |
Transfers and new subscriptions. 60 days’ notice required for withdrawals. |
|
1.75% |
£1 |
1.25% bonus until November 2014 |
New subscriptions only. |
|
|
NS&I Direct ISA |
1.75% |
£1 |
None |
New subscriptions only. |
|
Virgin Money Easy Access Cash eISA |
1.75% |
£1 |
None |
Transfers and new subscriptions. |
|
Dunfermline BS Easy Saver ISA |
1.75% |
£1 |
1.25% bonus until June 2015 |
New subscriptions only. |
|
Derbyshire BS Easy Saver ISA |
1.75% |
£1 |
1.25% bonus until June 2015 |
New subscriptions only. |
|
Stafford Railway Cash ISA |
1.75% |
£1 |
None |
New subscriptions only. |
|
Post Office Premier Cash ISA |
1.75% |
£100 |
0.5% for the first 18 months |
Transfers and new subscriptions. Only two withdrawals permitted a year. |
|
Teachers BS Cash ISA |
1.75% |
£100 |
None |
Transfers and new subscriptions. |
You'll notice some of these ISAs include bonuses which bump up the rate on offer. Just make sure you make a note of when the bonus ends as the rate will drop dramatically and you'll almost certainly want to move your money somewhere else.
Top fixed rate ISAs
If you want to earn a better rate, you'll need to lock your money away for a fixed period. No one-year ISA beats the top notice and easy access ISAs, but from two years and upwards you can get a slightly better return.
For inflation-beating returns, you're looking at a five-year ISA. Of course, over that period the base rate could have risen and interest rates could have become a lot more generous.
You can hedge your bets a tiny bit with Leeds Building Society's Access ISA, which allows you penalty-free access to 25% of your money.
|
Account |
Interest rate (AER) |
Minimum deposit |
Length of fixed rate |
Notes |
|
Leeds BS Five-Year Fixed-Rate ISA |
3.05% |
£1 |
Five years (fixed until 31st October 2018) |
Transfers and new subscriptions. |
|
Skipton BS Online Five-Year Fixed-Rate ISA |
3% |
£500 |
Five years (fixed until 11th October 2018) |
Transfers and new subscriptions. |
|
Leeds BS Fixed-Rate Access ISA (with 25% access) |
2.90% |
£1 |
Five years (fixed until 2 December 2018) |
Transfers and new subscriptions. |
|
Newcastle BS Fixed Rate Options ISA |
2.90% |
£500 |
Five years (fixed until 23rd October 2018) |
Transfers and new subscriptions. |
|
Halifax ISA Saver Fixed |
2.75% |
£500 |
Five years |
Transfers and new subscriptions. |
|
Halifax ISA Saver Fixed |
2.60% |
£500 |
Four years |
Transfers and new subscriptions. |
|
Halifax ISA Saver Fixed |
2.50% |
£500 |
Three years |
Transfers and new subscriptions. |
|
Nationwide Five-Year Fixed-Rate ISA |
2.50% |
£1 |
Five years |
Transfers and new subscriptions. |
|
Nationwide Four-Year Fixed-Rate ISA |
2.40% |
£1 |
Four years |
Transfers and new subscriptions. |
|
Cheshire BS Fixed Rate Cash ISA |
2.40% |
£100 |
Four years |
Transfers and new subscriptions. |
|
Derbyshire BS Fixed Rate Cash ISA |
2.40% |
£100 |
Four years (fixed until 30th November 2017) |
Transfers and new subscriptions. |
|
Dunfermline BS Fixed Rate Cash ISA |
2.40% |
£100 |
Four years (fixed until 30th November 2017) |
Transfers and new subscriptions. |
|
Coventry BS Three-Year Fixed-Rate ISA |
2.35% |
£5,760 |
Three years (until 31st May 2016) |
New subscriptions only. |
|
Virgin Money Fixed-Rate E-ISA (Issue 47) |
2.20% |
£1 |
Three years (fixed until 24th September 2016) |
Transfers and new subscriptions. |
|
Aldermore Fixed Rate Cash ISA |
2.15% |
£1,000 |
Two years |
Transfers and new subscriptions. |
|
Halifax ISA Saver Fixed |
2.10% |
£500 |
Two years |
Transfers and new subscriptions. |
Should you wait?
With Funding for Lending set to continue until 2015, rates might carry on getting worse before they get better.
So if you see a good rate, you might want to grab it while you can.