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The best cash Isas on the market now

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A cash Isa operates the same way as an ordinary savings account, but no tax is charged on any interest you earn. However, ultra-low interest rates and the introduction of the personal savings allowance have dented their popularity somewhat. 

Subscriptions to adult cash Isas fell from 13 million accounts in the 2019-2021 tax year to 12 million in 2020-2021, according to HMRC. But with the Bank of England raising interest rates to 2.25%, rates on cash Isa accounts are now back on the rise.

Make no mistake, with inflation at almost double digits, your savings will not grow in line with the cost of living. But by saving money in a cash Isa, you can mitigate some of the damage. They’re particularly attractive for higher and additional rate taxpayers, who might have to pay quite a bit of extra tax on savings income. 

Isa qualities to look out for 

When choosing a cash Isa there are two main factors to look out for: how long you are comfortable locking your cash up for, and the interest rate.

“Easy access” Isa accounts allow you to withdraw funds without incurring a penalty, and fixed-rate cash Isas offer a fixed rate of return – usually higher the longer you are prepared to lock your money away for. But beware: if you withdraw money before the end of term, then you are likely to be penalised, usually with a reduction in the rate of interest. 

Generally speaking, the longer you leave the money untouched, the more interest you can earn. 

In addition, many Isas are classed as “flexible”, which means that you can replace any funds you withdraw in the same tax year without affecting your annual Isa allowance. 

Below are some of the best easy-access, one-year fixed-rate and two-year fixed-rate cash Isas. 

The best easy-access cash Isas 

Santander – 1.85%

Santander’s eIsa account offers 1.85%. It can be opened online, over the phone or in branch and managed over the phone or online with a minimum deposit of £500. This is a variable rate account so the rate may change over time. 

Marcus by Goldman Sachs – 1.80%

This account can be opened online with just £1 and managed online or over the phone. This is a variable rate account so the rate may change over time. 

Saga – 1.80%

This account can be opened online and managed online or over the phone. You can open this account with just £1. This is a variable rate account so the rate may change over time. 

Cynergy Bank – 1.65%

Cynergy Bank‘s Online Isa offers an interest rate of 1.65%. The account can be opened and managed online with just £1. This is a variable rate account so the rate may change over time. 

Ford Money – 1.65%

This account can be opened and managed online with just £1. You can also manage this account via the app. This is a variable rate account so the rate may change over time. 

Tesco Bank – 1.61%

This easy access Isa offers 1.61% and can be opened and managed over the phone as well as online. 

You must retain a minimum of £10 in the account in order to be able to make free withdrawals.

Skipton Bank – 1.6% 

The Skipton Bank online Isa offers an annual equivalent return (AER) of 1.6%. You can open the account online with as little as £1.

The minimum age requirement to open this account is 16. The account allows transfer in (transferring your savings from one Isa account without forfeiting your tax status).

The interest rate is variable, so the amount you earn on any deposit could change over time. 

Coventry Building Society – 1.55%

This easy-access Isa offers 1.55% and can be opened with as little as £1. The account can be opened and operated online. 

The best fixed one-year fixed rate cash Isas

Castle Trust Bank – 3.15%

This one-year fixed-rate cash Isa pays 3.15%. You need a minimum deposit of £1,000 to open the account. The account can be opened and managed online.

Leeds Building Society 3.05%

This account offers a rate of 3.05% and it can be opened and managed only online. The minimum deposit for this account is £100. 

Virgin Money – 3.02%

This one-year fixed-rate cash Isa pays 3.02%. You need a minimum deposit of £1 to open the account. The estimated balance after 12 months based on a £1,000 deposit is £1,030.02. The account can be opened and managed online.

The best two-year fixed rate cash Isas

Leeds Building Society – 3.30%

This two-year fixed-rate cash Isa pays 3.30%. You need a minimum deposit of £1 to open the account. An interest rate of 3.30% will fetch you £67.08 in interest on a deposit of £1,000. The account can be opened via branch, online or over via post.

Virgin Money – 3.27%

This cash Isa offers 3.27%. It requires a minimum deposit of £1 and the account can be opened and managed online. An interest rate of 3.27% will fetch you £66.47 in interest on a deposit of £1,000. 

Yorkshire Building Society – 3.25%

Yorkshire Building Society offers an interest rate of 3.25% on its two-year fixed-rate cash Isa. You can open this account online with a minimum of £100. This account can also be managed online. An interest rate of 3.25% will fetch you £66.05 in interest on a deposit of £1,000.

https://moneyweek.com/personal-finance/savings/isas/stocks-and-shares-isas/the-best-cash-isas-on-the-market-now

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