The seven best cash Isas for 2011Which? experts reveal the top-paying cash Isas

03 March 2011

The Post Office improves rates for savers

UPDATE: There is now an updated version of this article available on our website. Please read Cash Isas: The latest Best Rate deals for the lowdown on the Isas currently paying market-leading rates.

With the Isa investment window about to close on 5 April 2011, Which? brings you a rundown of the seven best tax-free cash Isas.

Cash Isas are tax-free savings or investment accounts offered by banks, insurers, asset managers, building societies and National Savings & Investments (NS&I).

There are two main types of cash Isa accounts - instant access and notice accounts, which allow you to withdraw your money whenever you like (or within 30-90 days in the case of notice accounts) and fixed-rate cash Isas, which tend to pay a higher rate of interest but require you to tie your money up for at least a year.

The overall ISA subscription limit is currently £10,200 per tax year (the limit will increase to £10,680 for the next tax year). Up to £5,100 (£5,340 from next tax year) of this can be saved in a cash Isa, while the remainder can be invested in a stocks and shares Isa with either the same or another provider.

Instant access cash Isas

The highest-paying Best Rate instant-access Isa is currently the Santander Flexible Isa. This Isa pays 3.15% with an minimum initial deposit of £1, and can accessed in branch or by internet or telephone. However, the headline rate includes a 2.65% bonus payable for 12 months, meaning that after a year, the rate drops to 0.50%. This account does not accept transfers-in from other providers and interest is paid yearly.

Notice cash Isa accounts

If you want to save in this type of Isa, you are required to give notice of up to 90 days if you wish to make withdrawals. The length of the notice period depends on the provider.

The top-paying notice cash Isa is the National Counties BS 45 Day Notice Isa. This 45-day notice Isa has a variable rate of between 2.00% and 3.10% depending on the amount of money you invest. It pays 2% on £3,000 to £4,999, 2.50% on £5,000 to £9,999, 2.60% on £10,000 to £14,999, 2.70% on £15,000 to £19,999. 2.80% on £20,000 to £34,999 and 3.10% from £35,000. It can be accessed in branch or by internet or post, and interest is paid yearly.

1-year fixed-rate cash Isas

The top Best Rate 1-year fixed-rate cash Isa is the Barnsley BS Online Fixed Rate Isa. This Isa currently pays 3.20% with an initial investment of a minimum £100. It can only be accessed online. There is a transfer-out penalty of 120 days of lost interest if you wish to withdraw money early. Interest is paid yearly.

2-year fixed-rate cash Isas

The Yorkshire BS 2-year Fixed-Rate Cash Isa is the top-payer in this category. It pays 3.50% with an initial deposit of at least £100. Yorkshire BS is a Which? Recommended Provider with a customer satisfaction score of 61%. The account can be accessed in branch, or by post or telephone. There is a transfer-out penalty of 120 days of lost interest, and interest can be paid monthly or yearly.

3-year fixed-rate cash Isas

The Aldermore 3-year Fixed Rate Isa is the best 3-year fixed-rate cash Isa currently available. It pays 4.01% with an initial deposit of a minimum £1,000. It can be accessed by internet, post or telephone. The transfer-out penalty equates to 180 days of lost interest, and interest can be paid monthly or yearly.

4-year fixed-rate cash Isas

The top-paying 4-year cash Isa is the Principality BS 4-year Fixed Rate Isa Issue 75. This Isa currently pays 4.30% with an initial deposit of £1,000. It can be accessed in branch or by post. There is a transfer-out penalty of 300 days of lost interest, and interest is paid yearly.

5-year fixed-rate cash Isas

The Skipton BS Online Fixed Rate Cash Isa tops the 5-year cash Isa table. This Isa currently pays 5.00% with an initial deposit of £500. It can only be accessed online. There is a transfer-out penalty of 240 days of lost interest, and interest can be paid monthly or yearly.

For more information on Isas, read the Which? Money guides How to find the best cash Isa or read our guide to stocks and shares Isas.

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