Top Cash ISAs and how to get them

Fancy earning 5.5% on your cash ISA? Well if you can stick to some rules you may just be able to snap up a better rate of interest.

It seems a day doesn't go by without me seeing details of a product that looks really interesting, but has a host of rules and regulations attached in order to qualify. And regular readers will know that I abhor being told what to do with my money!

Is the rate worth the rules?

But things may be changing. With savings rates being so abysmal at the moment even I have come to accept that it may be worth jumping through a few hoops in order to qualify for the best rates.

So I've taken a closer look at cash ISAs. Which are the top paying accounts and what would I have to do to qualify?

1. Super Direct ISA - 5.5%AER

First up is a mouth-watering 5.5%AER from the Super Direct ISA available from Abbey, A&L and B&B (and if you're wondering why they're all lumped together, it is of course because they are all now part of the Santander group).

So what do I need to qualify?

Well, to get this rate you'll need a balance of £8,999 or less. Unfortunately, if you have between £9k and £43k the rate drops by 0.5%. Santander isn't keen to attract wealthy savers, it seems!

After a year the rate drops by 4.5% so be prepared to move your cash to a new ISA at this point.

Additionally, you must invest an identical amount in an investment plan with Santander, and hold your money in this plan for at least a year.

Accounts can be operated by phone, post or internet and, the good news is, Santander does allow you to transfer in existing ISAs.

Verdict

The Super Direct ISA is a decent option if you want to make an investment in the stock market as well as invest in a Cash ISA. But you must be prepared to research the investment plan carefully, to ensure you understand the risks. You must also be prepared to tie up your money for 12 months and to move your cash to a new ISA in a year's time... so it does pay to be cautious with this product.

2. Leeds BS 5 year fixed rate ISA - 4%AER

Next up is Leeds BS's offering - a healthy 4%AER on its 5-year fixed rate ISA. You can save up to £43,200 in the account and it does allow you to transfer in existing ISAs.

So what do I need to qualify?

As you've probably guessed, you'll need to be prepared not to have access to your money for a while, as it's a 5-year ISA.

However, you can instantly withdraw up to 25% of your investment without notice or loss of interest prior to it reaching maturity (which is 30 June 2014).

You are allowed to withdraw more than 25%, but you'll forfeit 180 days interest on the whole amount withdrawn.

It's also worth noting that the account can only be operated in branch, via the Leeds Building Society website or by phone.

But again, the good news is: you can transfer in existing ISAs.

Verdict

I like the fact you have a guaranteed rate of interest for five years - great if you can't be bothered shuffling money all the time. However, you'll need to be pretty sure that you won't need to touch at least 75% of that cash for a long while.

3. Halifax 4 year Fixed Rate ISA saver - 4%AER

Finally, Halifax's 4-year fixed rate ISA is also paying a tasty 4%AER. You will need £500+ to open the account which can be opened online, in branch or by post.

So what do I need to qualify?

Again, this is a fixed rate deal, this time for four years. However, it also has complicated tiered interest rates if you can't manage the full four years.

Interest rates

Generally speaking, the longer you can stash your money away for, the more interest you'll earn. And this account also allows you to transfer in existing ISAs.

Verdict?

Again, a guaranteed rate of interest is always a good thing, but you'll need to be prepared to leave your money untouched for the full four years if you want to earn the most interest.

So there you have it: three of the top paying cash ISAs and what you need to open one. And I must admit to being surprised at how uncomplicated some of them are.

What's more, the biggest revelation has been that each of the products mentioned allows existing ISAs to be transferred in - great news for those need to earn a better rate.

Of course, the one that suits you will depend upon how much you have to save, and how long you're willing to lock it away for.

Stocks and shares ISA

As a final note, don't forget you've also got a tax-free stocks and shares ISA allowance to use up, too - and if you fancy a punt on the stock market one of the easiest and cheapest ways to do it right now is via an index tracker Shares ISA.

For more info about ISAs, order one of our free ISA guides or visit our ISA archive.

More: The best cash ISAs for new starters |Open an ISA or you could lose £2,750