With the deadline to put money into your tax-free cash Isa account just one week away, Which? takes its weekly look at the best deals the market has to offer.
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 allowance for the tax year ending 5 April 2013 is £11,280. This will increase to £11,520 for the 2013/14 tax year, starting 6 April 2013, while the limit for cash Isas is will rise to £5,760 from £5,640.
The market’s best cash Isas
Instant-access cash Isa
Top of the pile at the moment in the instant-access cash Isa sector is Santander’s Direct Isa Saver Issue 1 account paying 2.5%, which includes a 2% bonus lasting 12 months and requires a minimum deposit of £2,500.
The Instant Access Cash Isa from Tesco Bank is better suited to smaller savers as it requires a minimum deposit of just £1. At 2.30% the rate is a little less generous than that offered by Santander, but since Tesco Bank’s rate includes a smaller bonus – 0.30% – the return on your savings won’t drop so dramatically after a year.
Notice cash Isa
Notice cash Isa accounts tend to pay a higher rate for locking up your money but be aware that some accounts don’t pay more than an instant-access Isa. Unfortunately at present, there are no notice accounts which pay more than the best-rate instant access account.
The best rate available is on the 33 Day Ethical Isa from Charity Bank, which pays 2.05% without a bonus.
One-year fixed-rate cash Isa
At present, there are no one-year fixed rate cash Isas on the market that can beat or even match the best instant-access account, so bear this in mind before deciding to tie up your money.
If you’d still like to lock away your money for 12 months, the best one-year deals at present are offered by Principality Building Society and Skipton Building Society. Both accounts pay 2.10% and require a minimum deposit of £500, but bear in mind that the Principality Building Society account does not allow transfers in, so you won’t be able to take advantage of this deal if you’re looking to move an existing cash Isa.
Two-year fixed-rate cash Isa
The two-year fixed-rate cash Isa deal from Santander paying 2.8% is the best product if you’re happy to tie your money up for two years. The minimum deposit required is just £1.
Three-year fixed-rate cash Isa
The Isa Saver Fixed from Halifax currently tops our three-year fixed-rate cash Isa table, paying 3% on initial balances of at least £500. The next best account pays 2.60% and is provided by Leeds Building Society.
Four-year fixed-rate cash Isa
The best four-year fixed-rate cash Isa deal at the moment is offered by Halifax and pays 3.05% on deposits over £500.
Five-year fixed-rate cash Isa
The Halifax’s Isa Saver Fixed account currently tops our five-year fixed-rate cash Isa table paying 3.10%.