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Best cash Isa rate launched: is this the right deal for you?

But is an Isa really the best way to save?

Virgin Money is now offering an instant-access Isa paying 1.21%, the best rate currently available. But in the current market, it may be worth looking beyond interest rate to find the best all-round deal. 

Available in branch and online, the Virgin Money Easy Access Cash Isa pays 1.21% AER. You can open it with a deposit of £1 and it accepts transfers in from existing Isas.

Which? explores other banks offering similar interest rates, plus other factors to consider when opening an Isa.


Best cash Isa rates currently available

Isa rates have been dismal in recent years – in fact 2017’s average rate of 0.93% was the lowest on record, according to Moneyfacts.

Virgin Money’s new Isa may be the highest paying option out there, but not by much.

Its interest rate is only 0.05% higher than easy-access cash Isas offered by Leeds Building Society, Paragon and AA, all of which pay 1.16%.

Which Isa providers give the best customer service?

With even the best interest rates so low, it could be worth thinking about more than just AERs when deciding where to keep your money.

In our latest customer satisfaction survey, almost 6,000 people rated their savings provider on customer service as well as communication, transparency and interest rates.

The table below details the five highest-paying easy-access Isas currently available, alongside their customer service scores. We’ve only included accounts that are available nationally and don’t have restrictions on them.

Interest rate (AER) Revert-to rate after bonus Minimum initial deposit Isa transfers in allowed? Interest paid Which? customer score
Virgin Money Easy Access Cash Isa 1.21% 1.21% £1 Yes Monthly 59%
AA Easy Access Cash Isa 1.16% 0.2% £100 Yes Yearly 70%
Leeds Building Society Limited Issue Online Access Isa 1.16% 1.16% £1 Yes On maturity 62%
Paragon Limited Edition Easy Access Cash Isa 1.16% 1.16% £1 Yes Monthly Not rated
Post Office Online Isa  1.15% 0.25% £100 Yes Yearly 53%

Is an Isa the best way to save?

Isas have traditionally been popular because they allow you to earn interest within the account tax-free.

But with the Personal Savings Allowance, basic-rate payers can now earn up to £1,000 interest without paying tax, while higher-rate payers can earn £500 – meaning Isas are far from your only option.

Some regular savings accounts offer higher rates than Isas – in fact First Direct, HSBC, M&S Bank and Santander are all offering 5% AER for the first 12 months to existing current account holders.

The downside of a regular savings account is that you’ll be limited on how much you can deposit per month, typically ranging from £250 to £500.

If you want to save more and are willing to lock up your savings for a set period (usually between one and five years), a fixed-rate savings account could also be an option. The best five-year fixed interest rate stands at 2.43% AER from Secure Trust Bank.

For smaller balances you may find that current accounts offer the best returns. For example, Nationwide’s FlexDirect account pays 5% AER on balances up to £2,500 for the first year, dropping to 1% after that.

Our guide to cash Isa alternatives explains other options including stocks and shares Isas, premium bonds and peer-to-peer lending.

Use our tool below to work out which is the best kind of savings account for you.


Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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