With the deadline to put money into your tax-free cash Isa account fast approaching, Which? provides our weekly look at the best deals out there.
Cash Isa deadline is 5 April 2013
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 2013 is £11,280 and this goes up to £11,520 for the new tax year of 2013/14 starting 6 April 2013. However, the limit for cash Isas is £5,640, going up to £5,760 for 2013/14.
The market’s best cash Isas
Instant access cash Isa
Top of the pile at the moment in the best instant-access cash Isa sector is Cheshire Building Society’s Direct Cash Isa paying 2.50%, but this account doesn’t allow transfers in from other providers.
Harpenden Building Society’s Simply Isa and Stafford Railway Building Society’s Cash Isa are worth noting as they allow transfers in from other providers and offer a headline rate of 2.25%. Both accounts don’t include a bonus, so you won’t have to worry about the rate dropping off after 12 months.
Notice cash Isa
Notice cash Isa accounts tend to pay a higher rate for locking up your money, but don’t rely on this always being the case as some accounts don’t pay more than an instant access Isa. Coventry Building Society’s 60 Day Notice Isa pays an attractive rate of 2.80%, but you’ll need to give 60 days notice to get at your cash.
One-year fixed-rate cash Isa
Metro Bank’s one-year fixed-rate cash Isa is the best in the market at present paying 2.25% and allows transfers in from other providers. The one-year fixed-rate Isa from The Halifax isn’t far behind with a rate of 2.05%.
Two-year fixed-rate cash Isa
The two-year fixed-rate cash Isa deal from The Halifax, paying 2.30% is the best product if you’re happy to tie your money up for two years.
Three-year fixed-rate cash Isa
The Bank of Scotland and The Halifax fixed rate Isa accounts currently top our three-year fixed-rate cash Isa table paying 2.40% on initial balances of at least £500. Lloyds TSB are next paying 2.35%.
Four-year fixed-rate cash Isa
The Bank of Scotland and The Halifax both pay 2.45% and are the best four-year fixed-rate cash Isa deals at the moment.
Five-year fixed-rate cash Isa
The Halifax’s Isa Saver Fixed account currently leads our five-year fixed-rate cash Isa table paying 2.50%. This account is closely followed by United Trust Bank’s Isa paying 2.45%.
Cash Isa tip of the week
If you want to move money from one Isa to another, your old and new Isa providers should arrange the transfer of your funds between them, protecting your tax-free benefits. You’ll need to complete an Isa transfer form, which will include a note to be sent to your existing Isa provider.
The key point is that you shouldn’t just take out the cash from your Isa account to deposit elsewhere – you’ll lose your tax benefits by doing this.