With the deadline to put money into your tax-free cash Isa account now only three weeks away, Which? Money provides our weekly look at the best deals out there.
Cash Isa deadline is 5 April 2012
The cash Isa deadline is important as it signifies the end of the tax year. You’ll lose this year’s tax-free savings allowance if you haven’t put money into an Isa before that date.
Each year you can deposit your savings into a cash and/or stocks and shares Isa. The overall limit for the tax year ending 5 April 2012 is £10,680 and this goes up to £11,280 for the new 2012/13 tax year starting on 6 April 2012. However, the limit for cash Isas is £5,340, going up to £5,640 for 2012/13.
The market’s best cash Isas
Warning: Isa deals and rates are changing every day at the moment as we approach 5 April 2012 and some offers are disappearing at short notice. Click on the links below for the most up-to-date deals.
Instant access cash Isa
The AA’s Internet Access Isa Issue 3 is now paying 3.5% (including a bonus of 3% for the first year), the best rate for instant access cash Isas, but does not accept transfers in from other providers. Cheshire BS’s Direct Cash Isa pays 3.35%, but also doesn’t allow transfers in.
Santander’s Direct Isa Issue 9 pays 3.30%, which includes a 12-month bonus of 2.80%, and is the highest-paying Isa to allow transfers in. The minimum deposit for this account is £2,500. Marks & Spencer Money’s Advantage Isa and Virgin Money’s Easy Access Isa/E-Isa are worth noting as they allow transfers in and the headline rates (3.0% and 2.85% respectively) don’t include a bonus, so you don’t have to worry about the rate dropping off after 12 months.
Notice cash Isa
Notice cash Isa accounts used to pay a higher rate for locking up your money, but don’t tend to anymore. The Aldermore 60 Day Cash Isa Issue 2 does pay an attractive rate of 3.15%, but you’ll need to give 60 days notice to get at your cash. After that the next best account pays 2.75%.
One-year fixed-rate cash Isa
Santander’s one-year fixed-rate cash Isa is the market leader in this sector paying 3.50% and allowing transfers in. The one-year fixed-rate Isas from Marks & Spencer Money and Metro Bank are next best with a rate of 3.25%.
Two-year fixed-rate cash Isa
Santander’s Two-year Fixed Rate Major Isa offers 4% in the two-year fixed-rate category and has a minimum deposit of £1. The two-year fixed-rate cash Isa deal from Halifax (3.70%) is also an attractive product if you’re happy to tie your money up for two years. Both of these Isas allow transfers in.
Three-year fixed-rate cash Isa
The Halifax three-year Fixed Rate Isa Saver account currently tops our three-year fixed-rate cash Isa table paying 4.25% on initial balances of at least £500. The Cheltenham & Gloucester Three-year Fixed Rate account pays 3.90%.
Four-year fixed-rate cash Isa
The Halifax four-year Fixed Rate Isa Saver pays 4.35% and is the only four-year fixed-rate cash Isa deal that qualifies to feature in our tables at the moment.
Five-year fixed-rate cash Isa
Once again, Halifax leads the way with its five-year Fixed Rate Isa Saver with a rate of 4.50%, a minimum deposit of £500 and allowing transfers in.
BM Savings, Clydesdale Bank and Yorkshire Bank’s Fixed-Rate Isa accounts are currently paying 4.25%. These Isas all allow transfers in from other accounts.
Cash Isa tip of the week
You’re only allowed to pay new money into one ‘active’ Isa per tax year, but you can hold multiple ‘inactive’ Isas from previous tax years. Don’t automatically put money into the same Isa as you had last year though, as it may not be offering a competitive deal this year. Also, it’s worth checking the rate you’re getting on previous years’ ‘inactive’ cash Isas – if the rate is disappointing, switch them to an Isa that allows transfers in.