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How to find the best cash Isa

How to pick the best cash Isa for your needs, what the top rates are, and how you can earn tax-free interest on your savings.

In this article
What are the best cash Isa accounts? What are the different types of cash Isa? What are the best cash Isa deals in 2021? What kind of cash Isa should you get?
What are combined cash Isa accounts? What are the alternatives to cash Isas? Who are the best and worst cash Isa providers? Which? Recommended Providers for savings and Isas, 2020-21

What are the best cash Isa accounts?

Inflation rose to 2.5% in June 2021, up from 2.1% the month before, according to the latest figures from the Office for National Statistics (ONS).

Below, we've listed the accounts paying the most interest on cash across instant-access, notice and fixed-rate deals at the time of publishing.

The Which? Money Compare Isa tables let you search hundreds of cash Isa accounts from providers large and small to help you find a great account, based on the quality of service as well as cost and benefits.

What are the different types of cash Isa?

Find out more about the different types of Isa available and which might be suitable for your savings goals. 

 

Fixed-rate cash Isas

 

If you sign up to a fixed-rate account, this usually means that - for a certain amount of time - your cash will earn a set rate of interest.

Rates are usually higher than instant-access accounts, and as a general rule, the longer you lock your money away for, the higher the rate will be. 

Most providers will specify a minimum initial deposit; the minimum amount you can save in order to qualify for the interest rate. You’ll need to check that you have enough savings to fulfil this requirement.

Once you’ve deposited your chosen amount of cash, many accounts won’t allow you to add further cash, or withdraw any, until the fixed term is up. Others may allow withdrawals, but you’ll likely be heavily penalised with a reduced interest rate on the savings that remain.

 

Notice cash Isas

 

 

Notice accounts don’t tend to have restrictions on how many times you can withdraw money - but you’ll experience a delay until you receive it. 

As the name suggests, you have to give notice to your bank or building society before you can gain access to your money. The most common notice periods are 30, 60 and 90 days. 

 

Regular cash Isas

 

Regular cash Isa accounts require regular monthly payments in order to qualify for the AER; the amount you have to pay in will vary between accounts.

You'll need to be confident that you can pay in the required amount each month for the account to be worth it.

 

Instant-access cash Isas

 

Instant-access accounts give you the flexibility to withdraw money whenever you like, while (usually) earning more interest than you would if the cash was just sat in a current account.

Interest rates are usually lower than those offered by regular, notice and fixed-rate accounts.

However, make sure you watch out for any tricky terms, that are most common with this kind of account. For instance, some accounts are billed as offering instant-access, but may restrict the number of withdrawals you’re permitted to make each year.

Others have a bonus rate for the first 12 months, after which point the AER may dramatically drop. 

What are the best cash Isa deals in 2021?

Instant-access cash Isa accounts (unlimited withdrawals)

Excluding accounts with limited withdrawals or other restrictions, the best instant-access rate in our tables is 0.54% AER. This rate is available from Cynergy Bank.

The next-best rate of 0.5% AER is offered by Marcus by Goldman Sachs, Leeds Building Society and Punjab National Bank.

One-year fixed-rate cash Isas

If you're able to lock your savings away for a year, you could earn 0.74% AER from Shawbrook Bank.

The next-best rate is 0.7% AER, offered by Paragon and Punjab National Bank.

Two-year fixed-rate cash Isas

The highest rate for a two-year Isa is 0.95% from OakNorth Bank.

The next-best rate is 0.91% AER from Shawbrook Bank and United Bank UK.

Three-year fixed-rate cash Isas

The highest rate for a three-year term is 1.06% AER from United Bank UK and OakNorth Bank.

The next-best rate is 1% AER from Paragon and United Trust Bank.

Four-year fixed-rate cash Isas

United Bank UK offers the highest rate of 1.11% AER. 

The next-best rate is 1.05% AER from United Trust Bank.

Five-year fixed-rate cash Isas

The current best five-year rate is 1.31% AER, from United Bank UK.

The next-best rate is 1.3% AER, from United Trust Bank.

Please note that minimum and maximum deposit amounts vary, even across products with the same rate, so make sure you consider the full details before you opt for a new account.

The links take you to Which? Money Compare, a comparison site for Isas offered by Which? Financial Services.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of the savings account provider before committing to any financial products.

What kind of cash Isa should you get?

If you’re not sure what kind of cash Isa account would suit your circumstances best, our handy tool can help you decide.

To find out whether instant-access is the way to go, or you’d be better off locking your cash up in a fixed-term account, simply answer the questions below.

What are combined cash Isa accounts?

According to current cash Isa rules, you’re only allowed to pay into one cash Isa account in each tax year. You can open a new account and transfer your current year’s deposit, but you have to transfer over the whole thing. 

If you have accounts with deposits from previous years, you can transfer all or part of those to a new account, just as long as no ‘new’ money is paid into more than one account.

However, to get around this rule, some banks and building societies have started to offer ‘combined Isas’ or 'portfolio Isas', where you can open multiple cash Isa accounts in the same year under the same ‘wrapper’. 

This is helpful if you really want to split up your cash - for instance, you may want to save some in a fixed-rate account, while keeping some in an instant-access account. 

What are the alternatives to cash Isas?

Savers can deposit up to £20,000 tax-free in an Isa during the 2021-22 tax year. 

This money can be placed in a cash Isa, a stocks and shares Isa, an innovative finance Isa, or a mixture of all three. 

Outside of your annual Isa allowance, you might want to consider placing additional funds in a traditional savings account, or interest-paying current accounts

Who are the best and worst cash Isa providers?

We know that customer service is an important factor for many people when choosing an Isa. But how do you find a bank or building society that combines great rates with top-notch customer service?

Which? is here to help. We've asked thousands of savers to rate their bank or building society, enabling us to create unique customer scores for all the major providers.

We've also analysed thousands of savings products and given each provider an overall product score, highlighting which companies offer consistently competitive rates. The full results from our 2020 analysis are as follows:

Best and worst Isa providers

Which? Recommended Providers for savings and Isas, 2020-21

Each year, we name the very best savings providers as 'Which? Recommended Providers' (WRPs). To win this award, the bank or building society must:

  • achieve a customer score of 70% or above;
  • achieve an above-average product score;
  • offer a savings account which sits in the top 10 in at least one category and another account sitting within the top half of at least one category;
  • be fully covered by the UK Financial Services Compensation Scheme (FSCS); and
  • offer products which are available nationally and are not tied to the purchase of another product with the same provider.

This year, our WRPs are:

Principality Building Society

Leading the way this year with a top customer score of 75% is Principality Building Society. In an era of rock-bottom interest rates, Principality customers appreciated a respectable return on their savings, awarding four stars for this in our survey.

Click the link to see Principality’s top-interest easy access account on Which? Money Compare, the Which? financial comparison site.

Aldermore

Maintaining its Which? Recommended Provider status for the second year in a row, Aldermore achieved five stars for customer service and also scored well for interest rates, clarity of statements and transparency of charges. 

Check out Aldermore’s easy-access account with Which? Money Compare.

Skipton Building Society

This building society has a stellar 81% product score, a strong 70% customer score and earned an impressive five stars out of five for its customer service.

About Which?'s savings account research

Scores and star ratings are based on a survey of 6,474 members of the general public in July 2020.

Which? Customer Score

This is Which?'s rating for customer satisfaction, based on feedback from real customers. The score is calculated based on customers' overall satisfaction with the brand, and how likely they are to recommend it to others.

Product score

We analyse nine key elements of savings accounts, from account management and restrictions to how often interest is paid, in order to calculate a product rating score. 

Providers must also offer an account sitting in the top 10 in at least one category of savings accounts and, if they offer more than one account, another product sitting within the top half of at least one category.

This ensures that the providers we endorse offer consistently good rates along with excellent customer service. 

Important note

Where possible, we've linked from the account names to more details on Which? Money Compare a comparison site for savings accounts offered by Which? Financial Services.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of the savings account provider before committing to any financial products.

Rates correct at time of publishing. Last updated 5 August 2021.

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