Coventry Building Society – the second largest building society in the UK and a Which? Recommended Provider – has launched a tax-free cash Isa paying 1.25% AER, placing the account high up on the best buy tables. But is it worth opening?
Coventry is one of the most popular providers of savings for consumers. In our most recent customer satisfaction survey, the building society scored 70% for customer satisfaction and has consistently offered a top-10 savings product.
RCI Bank, the financial arm of car manufacturer Renault, is Which?’s other savings recommended provider, with a customer satisfaction score of 77%.
Coventry’s new Isa in detail
The Easy Access Isa 7 is a ‘flexible’ instant-access Isa, not only allowing you to withdraw your savings whenever you want, but also take money out of the tax-free account and put it back in later without losing any of your Isa allowance (£20,000 in 2018/19).
The caveat here is you need to put the money back in by the end of the tax year (5 April 2019).
The account can be opened with just £1 by telephone, online, in branch or by post. Interest is calculated on a daily basis, and paid annually (on 31 March 2019.).
Crucially, the account accepts transfers in, so you could move some or all of your previous years’ Isa savings into the account. Not that if you’re transferring an Isa you opened this year, you have to move the full amount.
Find out more about how Isa transfers work in our video.
Is the account truly an Isa table-topper?
Coventry’s launch puts the account in the top three for best instant access Isas, but it fails to beat Al Rayan Bank’s Cash Isa, which pays 1.35% AER and Paragon’s Limited Edition, which pays 1.31% AER, according to Which? Money Compare’s Isa tables.
Both of those accounts accept transfers in.
If you’re willing to lock your money up for longer, however, you could secure even better Isa returns:
- The best one-year fixed-rate Isas, from Al Rayan Bank, Hodge Bank and Paragon, pay 1.5% AER
- The best two-year fixed-rate Isa, from the State Bank of India, pays 1.75% AER
- The best three-year fixed-rate Isa, from United Bank UK, pays 1.83% AER
- The best four-year fixed-rate Isa, from Hodge Bank, pays 2.05% AER
- The best five-year fixed-rate Isa, from United Bank UK, pays 2.65% AER
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.