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3x Clematis plants £7.50Best buy cash ISAs 2013/14:
EVERYONE over 16 in the UK gets
an allowance of £5,760 to save tax-free, each tax year, in a cash ISA. You don’t need to lock the cash away in one, many are easy-access and, once in, the cash stays tax-free year after year.
Don't worry if you've opened one in past years, you can open another — with a different provider if you choose. This daily-updated guide compares best buys and includes special calculators.
What is an ISA?
For years now, whether on telly, radio or in his book, Martin's used the same analogy to explain ISAs. So why stop now? Here come the cakes!
For a more detailed explanation of ISAs, (don't worry, it still includes cakes) see the ISA Guide.
How do cash ISAs work?
A cash Individual Saving Account (ISA) is just like a normal savings account - you can take cash out whenever you want, the only difference is the interest isn't taxed. For the current 2013-14 tax year, the annual ISA allowance is £11,520, but only £5,760 of that may be used for a cash ISA.
Everyone aged 16 or over can save their allowance in one each tax year (6 April-5 April). And the real kicker is...
Keep the money in the ISA - it stays tax-free, YEAR AFTER YEAR.
With normal savings, basic rate taxpayers hand over 20% of the interest to the taxman, higher rate taxpayers 40%, - but in an ISA, you keep that. So basic rate taxpayers earn a quarter more interest at the same rate in a cash ISA, and higher rate taxpayers two-thirds more.
However, there are many confusions with cash ISAs, so to spell it out....
1. Money may be withdrawn at any time without losing tax benefits
Providing you've picked an easy access ISA, you can withdraw the money whenever you want, just like a normal savings account. The key thing to remember is once the money's withdrawn, it can't be returned.
An example should help. Say you save £4,000. That leaves £1,760 left to put in. Then two months later, still in the same tax year, you take out £2,000. You can still ONLY put £1,760 back in.
2. You get a new ISA allowance each tax year
Each tax year (6 April until the next 5 April) everyone aged 16 or over gets a new cash ISA allowance. But if you don't use it, you lose it.
Once that year's closed, you can't put another penny in that specific cash ISA allowance. So if you put aside nothing in the 2012-13 year, that's it - it's gone. If you put £2,000 in, even though that year's maximum was £5,640 - the year is closed, you can't now top it up.
Yet if you do deposit the cash in time, you can keep it in there, tax-free for as long as you like.
As soon as the new tax year starts on 6 April, you can put a whole new year's allowance in.
3. You can have lots of ISAs, but only from different years
The golden rule is you can only open a cash ISA with one provider in a tax year, you can't split it. However you can hold lots of different cash ISAs from different years with different providers.
So if you opened a cash ISA with Barclays two years ago, you don't need to stick with it for this year's cash ISA, you can choose whoever the top payer is.
4. You can transfer ISAs from past years to up the rate from pitiful lows
ISA providers love us to think once our money's in, its a done deal. This is wrong. You have a right to transfer past years' cash ISAs to the new best buys - and if you've got serious cash saved in them, this can make a massive difference.
For full pros and cons on this, and which top paying cash ISAs allow you to transfer, see the full Cash ISA Transfers guide.
5. Make sure your savings are safe
Provided your money is in a UK-regulated bank or building society account, it's protected under the Financial Services Compensation Scheme (FSCS). Its golden rule counts for cash ISAs too...
The first £85,000 per person, per financial institution is guaranteed.
While that sounds simple, the exact rules are more complex - not every bank in the UK is UK-regulated and there are complex rules involving how different banks are registered and what counts as a financial institution. For full info on the rules, see the detailed Are Your Savings Safe? guide.
How to maximise safety
If you've more than £85,000 of savings (including cash ISAs and others) in one bank then, in the unlikely event it went bust, only the first £85,000 is fully guaranteed. So for total peace of mind, don't put more than this in any one institution. Spread it around instead.
This guide and best buys
It's impossible to pick "which bank is in trouble?" We've seen great names of world banking like Goldman Sachs and Merrill Lynch in trouble.
Therefore our preferred option is to report the top rates regardless, but to let you know if it's not covered by the UK protection.
Ensure you stay protected - keep updated on safety changes Get MoneySavingExpert's free, spam-free weekly email full of guides & loopholes
The UK's top rate cash ISAs
This guide is updated daily with new products that top the best buy tables. The top ISAs currently available for 2013/14 are below.
Watch out for short term bonuses, withdrawal limits & more
When picking the one for you, in general, higher interest is better, yet tricks like short-term bonus interest rate hikes, limited withdrawals and transfer penalties abound. We explain them below. Most cash ISAs are 'variable rate', meaning providers can change them whenever they decide to, so regularly check the rate's still competitive. If it's not, transfer it.
Always check how long it will take to get your money
We list the top rate ISAs, but some of these accounts have withdrawal restrictions or penalties. If you might need it, make sure the ISA you pick allows you to easily access your money.
Consider locking in if you don't need the cash
Or, if you know you won't need to get access to your money this tax year, consider locking it away - see the top Fixed Rate Cash ISAs. However, at the moment, very few fixed rate accounts offers more than the top instant access ISA - but they do offer certainty over the rate.
Finally, check local credit unions or branches of smaller building societies, which often have good rates for locals.
Easy access best buys 2013/14
Cheshire BS, 2.3% AERTop open-to-all easy access rate, likely decent till Oct 2014.
- Rate: 2.3% AER includes 1.8% bonus until 31 Oct 2014
- Min deposit: £1,000
- Interest paid: Annually only
- Allows previous ISA transfers? Yes
- Transfer out penalties? No
- Access: Post only. Applications online/phone
- Safety: Shared £85,000 UK protection
Nationwide-owned Cheshire BS's ISA Saver (issue 3) pays top rate that anyone can get, plus a big 1.8% AER bonus till Oct 2014 effectively acts as a 17 month rate guarantee of at least 1.8%. However, access is postal-only, which may put some off.
You must make a minimum deposit of £1,000 but you can also transfer in previous years' ISAs.
➕ Going to get this? Click for full details first
Cheshire BS is part of Nationwide, so it shares the £85,000 UK protection along with Derbyshire and Dunfermline building societies. See more information about the Savings Safety rules.
NS&I, 2.25% AER 100% savings safety. Min £1. Transfers not allowed.
- Rate: 2.25% AER variable
- Min deposit: £1
- Interest paid: Annually on 5 April
- Allows previous ISA transfers? No
- Transfer out penalties? No
- Access: Online or by phone
- Safety: 100% protected - fully govt. backed
The only provider to protect 100% of your cash, the NS&I Direct ISA pays a variable 2.25% AER, so be prepared to ditch and transfer if the rate drops.
You can save from £1, but transfers in of previous years' ISAs are not allowed. It allows unlimited withdrawals and deposits.
➕ Going to get this? Click for full details first
NS&I is the only savings provider fully backed by the UK Government so it guarantees to protect 100% of the money you save in it. See the Savings Safety guide for more details.
Nationwide, 2.5% AER Boost rate for its bank account custs only. No Transfers.
- Rate: 2.5% AER includes a 1% bonus until 30 Nov 2014
- Min deposit: £1
- Interest paid: Annually on 30 Sept
- Allows previous ISA transfers? No
- Transfer out penalties? No
- Access: Online or in branches
- Safety: Shared £85,000 UK protection
You can get a better easy access rate if you hold a Nationwide FlexDirect, FlexPlus or (for some) FlexAccount current account. If you do, Nationwide's Flexclusive ISA (issue 3) pays 2.5% AER, and includes a 1% bonus until 30 Nov 2014.
If you've a cashcard or savings account, or a mortgage or credit card holder, you can get its Easy Saver ISA* paying 2.25% AER, including a 1.75% bonus until 31 Oct 2014.
Transfers in of previous years ISAs aren't allowed so if you want to do this, see Cheshire below. The account can be opened and accessed online or in branches.
➕ Going to get this? Click for full details first
For FlexAccount customers, you'll need to have switched using its account transfer service in the last four months or have paid in £750/mth for the last three months. See how the three Nationwide current accounts compare in the Best Bank Accounts and Best Premier Current Accounts guides.
Nationwide shares its £85,000 UK protection with Cheshire, Derbyshire and Dunfermline building societies. See more information about the Savings Safety rules.
Regular Saver ISA
Regular saver ISAs work the same way as normal regular savings accounts, which require you to pay in something (up to a set maximum) each month, except in the ISAs the interest isn't taxed.
Newcastle BS, 3% AER (2% if you withdraw cash) Must deposit £1-£500/mth. No good for lump sums
- Rate: 3% AER (if no withdrawals made)
- Monthly deposit: £1 - £500
- Interest paid: Monthly
- Allows previous ISA transfers? No
- Transfer out penalties? No
- Access: Online, phone, post or branch
- Safety: Full £85,000 UK protection
A substantially higher rate's on offer with Newcastle's Big Home Saver ISA. it pays 3% AER each month that you pay in £1-£500 and don't make a withdrawal. Yet take cash out, or miss a pay-in, and you only earn 2% AER for that month.
So, while no good for saving a lump sum upfront, if you'll pay in most months and not make too many withdrawals, this still beats Cheshire above. Even if your interest drops to 2% in three or four months per year, the overall return with Newcastle is likely to be greater. You can't transfer previous years' ISA allowances into this account.
➕ Going to get this? Click for full details first
Newcastle Building Society has the full £85,000 UK savings safety guarantee. See more information about the Savings Safety rules.
It's called the Big Home Saver because if you use the saved funds to get a mortgage with Newcastle, you get either £500 or £1,000 cashback when you complete on the mortgage. If you don't get a mortgage with Newcastle, then you don't get the cheque. Interest payments are unaffected.
Although you can pay up to £500 into the account each month, watch that over the 12 months you don't put more than £5,760 into your cash ISA. If you put £500 in each month for 11 months, your final payment will need to be £260 - fail to change this and Newcastle BS will reject the payment.
To see how switching will affect your savings, use the ISA Savings Calculator and input the interest.
Top ethical variable rate cash ISAs
Ethical savings accounts - where providers behave ethically in terms of the environment, human rights and more - have jumped in popularity. Our main focus always is telling you the top savings rates, but to match demand we've worked with Ethical Consumer to list the top-paying accounts that also rate highly on their ethics.
Ethical ISAs: Earn up to 2.3% AER tax-free
All these accounts have the full UK savings safety protection. See the graph on the right for what Ethical Consumer's ratings mean.
-
2% AER - most ethical
Ecology Building Society's Foundations Cash ISA pays 2% AER variable on balances over £25. It allows unlimited withdrawals but you can't transfer in previous years' ISAs. Apply by post only.
Ecology BS has the full UK £85,000 savings safety - more info on Savings Safety rules. Ethical Consumer score: 16 out of 20. -
2.3% AER- highest paying ethical account.
The overall open-to-all top pick from Cheshire BS is also ethical. Its ISA Saver (issue 3) pays 2.3% AER incl a 1.8% bonus for a year. Min deposit's £1,000 and it allows unlimited withdrawals and transfers in of old ISAs.
Ethical Consumer score: 12.5 out of 20.
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The top fixed rate accounts
If you're willing to lock your cash away, there are some alternatives which guarantee rates for a set period of time. Yet remember...
Fixed rate ISAs give a guaranteed rate for a set period, but you will face severe penalties if you try to take money out during that time.
Therefore they're mainly suitable for those happy to lock cash away for the entire term - meaning you lose the flexibility to ditch and switch to a better payer if the rate is no longer competitive.
Also, at the moment only longer fixed rate accounts beat the top easy access rates available, so consider very carefully before locking your cash away. Top easy access rates could drop, but equally they could rise, and then you'd be trapped.
The best one-year fixed rates
Rates are very poor on one-year accounts - you can get 2.5% AER in the top easy access accounts above, compared with 2.35% in the highest one year fixed.
Click to see all one-year fixed rates.
Britannia 2.35% AER Co-op bank acc holders only. Apply post/branch. Transfers allowed.
- Product & linkBritannia Fixed Rate Cash ISA
- Rate: 2.35% AER
- Length of fixed deal: to 6 Apr 2014
- Min deposit: £1
- Access: Post/branch
- Allows transfers from previous years? Yes
- Savings safety: Shared £85,000 FSCS protection
Withdrawals are permitted, subject to a 180-day interest penalty.
If you're a Co-op or Smile current account holder, and you've paid in at least £800/mth for the last three months, you can get the Fixed Rate Cash ISA from Britannia, paying 2.35% AER until 6 Apr 2014. The minimum balance is £5,640 if you're depositing this year's allowance (going up to £5,760 for 2013/14), or from £1 in you're transferring in previous years' ISAs.
In order to remain eligible for this account, you must continue to pay in £800 otherwise the rate will drop to 1.8% AER.
Britannia shares one lot of £85,000 UK savings safety guarantee with Co-operative Bank and Smile. See more information about the Savings Safety rules.
Virgin 2.2% AER
From £1. Apply online. Allows transfers
- Product and linkVirgin Fixed Rate E-ISA
- Rate: 2.2% AER
- Length of fixed deal: to 24 May 2014
- Min deposit: £1
- AccessOnline
- Allows transfers from previous years?Yes
- Withdrawal penalty:60 days' interest
- Savings safety: Full £85,000 FSCS protection
Withdrawls subject to 60-day interest penalty on the amount withdrawn.
The Virgin Fixed Rate E-ISA (issue 40) pays 2.2% AER until 24 May 2014 on balances over £1. You can also transfer in money from previous years' ISAs and make additional deposits after opening.
It's an online-only account, although there is a branch or post version available. Interest can be paid annually or monthly.
Virgin has the full £85,000 UK saving safety guarantee. See more information about the Savings Safety rules.
The best two-year fixed rates
Fixing for longer means running the risk of rates improving in the mean time, but at the moment, one of the top picks is for two years - a decent time frame if you prefer to lock your cash away.
Britannia 2.6% AER Co-op bank acc holders only. Apply post/branch. Transfers allowed.
- Product & linkBritannia Fixed Rate Cash ISA
- Rate: 2.6% AER
- Length of fixed deal: to 6 Apr 2015
- Min deposit: £1
- Access: Post/branch
- Allows transfers from previous years? Yes
- Savings safety: Shared £85,000 FSCS protection
Withdrawals are permitted, subject to a 180-day interest penalty.
If you're a Co-op or Smile current account holder, and you've paid in at least £800/mth for the last three months, you can get the Fixed Rate Cash ISA from Britannia, paying 2.6% AER until 6 Apr 2015. The minimum balance is £5,760 if you're depositing this year's allowance, or from £1 in you're transferring in previous years' ISAs.
In order to remain eligible for this account, you must continue to pay in £800 otherwise the rate will drop to 2.05% AER.
Britannia shares one lot of £85,000 UK savings safety guarantee with Co-operative Bank and Smile. See more information about the Savings Safety rules.
Coventry BS 2.55% AER
Apply online, by phone or in branch. Min £5,760. No transfers.
- Product & link Coventry BS
- Rate: 2.55% AER
- Length of fixed deal: to 31 May 2015
- Min deposit: £5,760
- Max deposit: £5,760
- Savings safety: Shared £85,000 FSCS protection with Stroud & Swindon BS
The Coventry BS Fixed Rate ISA (15) pays 2.55% AER until 31 May 2015. You must deposit the full 2013/14 allowance of £5,760. Transfers in of previous years' ISAs aren't permitted.
You can open and operate the account online, by phone or in branches and interest is paid annually on 31 May. If you close the account early, there's a 120-day interest penalty on the closing balance.
Coventry Building Society shares its £85,000 UK savings safety guarantee with Stroud & Swindon. See more information about the Savings Safety rules.
Santander 123 customers only: 2.5% AER From £1. Apply in branch. Allows transfers
- Product & linkSantander Fixed Rate Cash ISA
- Rate: 2.5% AER for 123 cust
- Length of fixed deal: 2 years
- Min deposit: £1
- Access: Online/branch/phone
- Allows transfers from previous years? Yes
- CLOSURE penalty: 120 days' interest
- Savings safety: £85,000 FSCS, shared with Cahoot
- If you are a Santander 123 account customer, Santander's 2 year Fixed Rate ISA pays 2.5% AER .
- You can save from £1 and can also transfer in money from previous years' ISAs. It can be operated by phone or in branches and can be viewed online. Interest will only be paid annually.
- Early closure will result in a 120-day interest penalty on the amount withdrawn.
- Santander shares its £85,000 savings safety protection with Cahoot, meaning if you've more than that saved across those two, the extra isn't protected. See more information about the
Savings Safety rules.
The best three-year fixed rates
The top three-year is beaten by the top two-year rate, so you may prefer to opt for a shorter fix. Be aware that if rates improve before 2016, you could lose out.
Click to see all three year fixed rates.
Virgin 2.4% AER
From £1. Apply online. Allows transfers
- Product and linkVirgin Fixed Rate E-ISA
- Rate: 3% AER
- Length of fixed deal: to 24 May 2016
- Min deposit: £1
- AccessOnline
- Allows transfers from previous years?Yes
- Withdrawal penalty:120 days' interest
- Savings safety: Full £85,000 FSCS protection
Withdrawls subject to 120-day interest penalty on the amount withdrawn.
The Virgin Fixed Rate E-ISA (issue 41) pays 2.4% AER until 24 May 2016, on balances over £1. You can also transfer in money from previous years' ISAs and make additional deposits after opening.
It's an online-only account, although there is a branch or post version available. Interest can be paid annually or monthly.
Virgin has the full £85,000 UK saving safety guarantee. See more information about the Savings Safety rules.
The best four-year fixed rates
There aren't currently any accounts offering a top rate when saving for four years. The best option is to choose a shorter fix for two - three years, depending how long you want to lock cash away for.
The best five-year fixed rates
The best five-year fix is 3% but if interest rates improve before 2018, then you could lose out. If you want to take the gamble, click for the highest payers.
Click to see all five year fixed rates.
Virgin 3% AER
From £1. Apply online. Allows transfers
- Product and linkVirgin Fixed Rate E-ISA
- Rate: 3% AER
- Length of fixed deal: to 24 May 2018
- Min deposit: £1
- AccessOnline
- Allows transfers from previous years?Yes
- Withdrawal penalty:180 days' interest
- Savings safety: Full £85,000 FSCS protection
Withdrawls subject to 180-day interest penalty on the amount withdrawn.
The Virgin Fixed Rate E-ISA (issue 42) pays 3% AER until 24 May 2018, on balances over £1. You can also transfer in money from previous years' ISAs and make additional deposits after opening.
It's an online-only account, although there is a branch or post version available. Interest can be paid annually or monthly.
Virgin has the full £85,000 UK saving safety guarantee. See more information about the Savings Safety rules.
Principality BS 2.75% AER From £500. Apply online/post/branch. Transfers allowed.
- Product & linkPrincipality Fixed Rate Cash ISA
- Rate: 2.75% AER
- Length of fixed deal: 5 years
- Min deposit: £500
- Access: Online, post or branch
- Allows transfers from previous years? Yes
- Savings safety: Full £85,000 FSCS protection
The five-year Fixed Rate Cash ISA (issue 109) from Principality pays 2.75% AER on balances over £500, and you can transfer in previous years' ISAs.
Withdrawals aren't allowed, but early closure is subject to a 360 day interest penalty on the amount withdrawn. Additional deposits are permitted, while the issue remains open to new customers.
Principality BS has the full £85,000 UK savings safety guarantee. See more information about the Savings Safety rules.
Use the net to compare top rates
Fixed rate deals can change regularly. For a full list of fixed rate ISAs, use the MoneySupermarket* comparison (select cash ISAs and then bonds) or Moneyfacts. Though remember, they're just a simple list of top rates, so ensure you check for the possible pitfalls noted in this article.
Top ethical fixed rate cash ISAs
Ethical savings accounts - where providers behave ethically in terms of the environment, human rights and more - have jumped in popularity. Our main focus always is telling you the top savings rates, but to match demand we've worked with Ethical Consumer to list the top-paying accounts that also rate highly on their ethics.
Earn up to 2.75% AER fixed, tax-free
Savings rates are low at the moment so you may be better opting for a shorter fix. We've detailed the best ethical options currently available.
All have the full UK savings safety protection. See the graph on the right for what Ethical Consumer's ratings mean.
-
2.1% AER fixed for one year
The Fixed Rate Cash ISA (issue 104) from Principality BS pays 2.1% AER for a year, on deposits from £500 . Withdrawals and transfers from previous years' ISAs aren't allowed. Ethical Consumer score: 13.5 out of 20.
-
2.55% AER fixed for two years
The Coventry BS Fixed Rate ISA pays 2.55% AER until 31 May 2015. Transfers from previous years' ISAs aren't allowed and you must deposit the full 2013/14 allowance of £5,760.
Ethical Consumer score: 13.5 out of 20. -
2.75% AER fixed for five years
The five-year Fixed Rate Cash ISA (issue 109) from Principality BS pays 2.75% AER on balances over £500. Transfers from previous years' ISAs allowed.
Ethical Consumer score: 13.5 out of 20.
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Inflation-beating ISA savings
An alternative to fixing is to get an account that gives you a rate guarantee for a certain period. However, you usually have to lock cash away for up to five years, so only go for it if you are totally sure you won't need access. Unfortunately, savings rates are poor at the moment so there aren't any available - see full details in the Inflation-Linked Savings guide.
Cash ISAs: Q&A with Martin Lewis
Filmed on 14 March 2011
What about Toisas?
The Tessa-only ISA, tongue-twistingly known as a Toisa, was another special tax-free product. Old style Tessas, the forerunner of the cash ISA, lasted for five years and then matured. If this occurred any time between 1999 and 2004, the Tessa automatically turned into a Toisa.
Since April 2008, all Toisas have become simple Cash ISAs, meaning all normal ISA rules apply. You can no longer add funds to an old Toisa, but if you have any money left in one, you can transfer it and up the rate. See Cash ISA Transfers for the best accounts that let you move money in.
The Savings Calculator
When using the calculator below, for increased accuracy use the AER (Annual Equivalent Rate) which should be listed on your statement. Obviously as most accounts' interest rates are variable, the answers will change if the rate does, so only use the calculator as a rough indicator of the likely outcome.
The calculator assumes you put money in at the beginning of each month, so if this isn't how you do it, the answers will be ever-so-slightly out. If you don't make regular deposits but put in lump sums, figure out the monthly equivalent for a rough answer. Feel free to play with the results to see how your savings are affected.
The size of the saving
A basic rate taxpayer saving £5,760 over three years, in a poor savings account, of which there are sadly many, would earn £14 interest. In a top savings account it's £281, but the same amount in the top cash ISA, as it's tax free, earns £461. Yet not all cash ISAs are the same. One of Halifax's pays a paltry 0.1%, meaning it'd underpay the market leader by nearly £450.
The benefits are even bigger for top rate taxpayers; then the top cash ISA outperforms the top savings account by more than £270.
| Interest earned on £5,760 over 3 years | |||||
|---|---|---|---|---|---|
Interest rate | Untaxed | Basic rate tax |
Higher rate rax |
Additional rate tax |
|
Poor savings account (1) | 0.1% | £17 | £14 |
£10 |
£9 |
Top savings account (2) | 2% | £353 | £281 |
£210 |
£192 |
Poor ISA (3) | 0.1% | £17 | £17 |
£17 |
£17 |
Top easy access ISA (4) | 2.6% | £461 | £461 |
£461 |
£461 |
Assumes rates are stable (1) Halifax Liquid Gold (2) Coventry BS (3) Halifax variable rate ISA (4) Coventry BS Poppy ISA | |||||
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