With the deadline to put money into your tax-free cash Isa account now just over a month 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 Cheshire Building Society’s Isa Saver Issue 1 account paying 2.5%, which includes a 2% bonus payable to 31 July 2014 and requires a minimum deposit of £1,000.
The instant-access cash Isas from Harpenden Building Society, GE Capital Direct and Stafford Railway Building Society are worth noting as they all pay 2.25% and 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 be aware that some accounts don’t pay more than an instant-access Isa. Coventry Building Society’s 60 Day Notice Isa pays an attractive rate of 2.8% but this includes a bonus of 2% over 12 months, after which time the rate will drop to 0.8%.
If you’re looking for a more consistent rate, the Notice Isa from Earl Shilton Building Society pays 2.7% without a bonus but this account requires 90 days notice before you can withdraw your money.
One-year fixed-rate cash Isa
Metro Bank’s one-year fixed-rate cash Isa is the best in the market at present. It pays 2.25% and allows transfers in from other providers. The one-year fixed-rate Isa from Halifax isn’t far behind with a rate of 2.05% but this account requires a minimum deposit of £500.
Two-year fixed-rate cash Isa
The two-year fixed-rate cash Isa deal from Halifax paying 2.5% is the best product if you’re happy to tie your money up for two years.
Three-year fixed-rate cash Isa
The Isa Saver Fixed from Halifax currently tops our three-year fixed-rate cash Isa table, paying 2.6% on initial balances of at least £500. Bank of Scotland and Lloyds TSB follow closely behind with a rate of 2.4% but the Isa from Lloyds TSB requires a minimum deposit of £3,000.
Four-year fixed-rate cash Isa
The best four-year fixed-rate cash Isa deal at the moment is offered by Halifax and pays 2.65% 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 2.7%. This account is closely followed by the Skipton Building Society Isa, which pays 2.5%.
Cash Isa tip of the week
If you’re prepared to take more of a risk, you might wish to consider investing in a stocks and shares Isa. You can invest up to £11,280 tax-free in the current tax year, rising to £11,520 from 6 April 2013.
Since 2008, it has been possible to transfer money from a cash Isa to a stocks and shares Isa. However, once you’ve opened the stocks and shares Isa you won’t then be able to revert to cash again.