Which? Money provides its weekly look at the best savings deals currently available to help you deposit your cash in the right account.
Best cash Isa savings accounts on the market
The top-paying instant access cash Isa deal currently pays just 1.75% – the lowest rate on offer since cash Isas were launched in 1999.
Although interest rates on taxable instant access savings accounts have fallen more dramatically, until recently, rates on cash Isas had fared a little bit better overall.
However, over the past few months, we have seen rates on instant access cash Isas fall significantly. For example, back in August 2013, the top-paying Isa paid 2.25% compared with 1.75% today – a difference of 0.5% in interest.
Isa rates have fallen over the years
Go back even further, though, and rates were almost unrecognisable. Fourteen year ago, the best cash Isa interest rate you could get was 6.5%. And just one-year on, in November 2000, rates peaked at an impressive 7.25%.
If you’d invested £6,000 (including £3,000 from your previous years’ Isa) into this deal at 7.25%, you would have earned £435 – assuming the rate remained unchanged throughout the year. Investing the same amount in a Best Rate cash Isa today (at 1.75%) would earn you just £105 – £330 less.
Despite the base rate remaining at 0.5% for more than four years, headline rates have fallen by 1.25% over this period of time.
Although interest rates are at an all-time low, it still makes sense to save in a tax-free account before investing your money in a taxable account. You have until April 5 2014 to use up the 2013-14 cash Isa limit of £5,760.
If you’re happy to tie-up your money for a short term, the best one-year fixed-rate cash Isa from Virgin Money, pays 1.91%.
Find more Best Rate products
- Best Rate savings accounts – to find the best instant, notice and one to five-year fixed rate accounts.
- Best Rate cash Isas – to find the best tax-free instant, notice or fixed rate cash Isa deals.
- Best Rate credit cards – to find the best cards to suit your requirements.
- Top unsecured personal loans – for borrowing £10,000 over 5-years or £5,000 over 3-years.
And finally… boost your savings
To find out if your savings account is paying a competitive interest rate, check out the Which? Savings Rate Booster tool and switch your account for a better deal if necessary.