Santander-owned Alliance & Leicester has launched a tax-free cash Isa at a market-leading 3.5% for easy access.

The Flexible Isa, also available to Santander customers, is only open to new money, so you cannot transfer in from other accounts (see the Top Cash Isa guide).

The rate, from a minimum £1 balance, is guaranteed to stay at three percentage points above Bank of England Base Rate (currently 0.5%) for a year, while it cannot drop below 3.5%.

Rate drop

After 12 months, the account pays a variable rate, currently 0.5%.

If you want a higher return, you can earn up to 4% via alternative providers if you're prepared to lock your cash away for three years (see the Fixed Rate Isa guide).

A cash Isa is a normal savings account where the interest earned is not taxed. Anyone over 50 by April can deposit up to £5,100 per tax year (April-April), while anyone else can save £3,600.

From April 6, when the next tax year begins, the limit for all will be £5,100.

Isa transfers

Plummeting savings rates have seen millions earning a fraction of a percent on their tax-free savings .If you're getting a poor return and your cash is not locked away, then switch.

The top deals to transfer new money to come from First Direct at 2.75% easy access or 3% with 120 days' withdrawal notice from Newcastle Building Society (see the Isa Transfers guide for full details).

Further reading/Key links

Top deals: Cash Isas, Isa Transfers