How to find the best cash Isa

Isas

How to find the best cash Isa

By Chiara Cavaglieri

Article 2 of 7

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How to find the best cash Isa

How to pick the best cash Isa for your needs and earn tax-free interest on your savings. 

With savings rates currently at an historic low, it's more important than ever to find an account that suits your needs. 

Cash Isas allow you to save tax-free, and they can offer better returns than traditional savings accounts. But with so many different products out there it can be tricky to find the most suitable one.

Among other things, it's key to consider how long you're willing to lock your funds away for and whether you can commit to regular monthly payments.   

The flowchart below makes it simple for you to find the best cash Isa for your needs.

Keep an eye on your savings rate 

Even if you start off with a great rate on your cash Isa, it's likely this will change over time. It's important to keep an eye on your rate and think about switching if it starts to take a nose dive. 

You can also use our free emindme email reminder service to alert you when any bonus or fixed-rate period is about to come to an end. 

If you decide you want to switch, watch out: not all Isa providers allow you to transfer in Isa savings from previous tax years. You may face a transfer penalty if you want to switch. 

Most importantly, be sure that you carefully follow the rules for switching your cash Isa provider; any mistakes could mean your money loses its tax-free status.

Find out more: How to transfer your cash Isa - read our in-depth guide to switching your Isa. 

Alternatives to cash Isas

Savers can deposit up to £15,240 tax-free in an Isa during the 2016/17 tax year, rising to £20,000 from April 2017. 

This money can be placed in a cash Isa, a stocks and shares Isa, or a mixture of both. 

You can also open a new type of Isa called the innovative finance Isa, which was introduced on 6 April 2016, to earn tax-free interest from peer-to-peer (P2P) lending platforms such as Zopa and RateSetter.

Outside of your annual Isa allowance, you might want to consider placing additional funds in a traditional savings account, or interest-paying current accounts. 

Find out more: Cash Isa alternatives - other ways to boost your savings.

  • Last updated: September 2016
  • Updated by: Chiara Cavaglieri