Archive: MoneySavingExpert's Money Tips Email

Martin: Cash ISAs are finally getting nicer (nisa?)
Cash ISA rates can now pay 4.3%, so many can up their interest, but for some they're a waste of time. Should you USE 'em or LOSE 'em?

The top cash ISA rates are up. Good news for the millions with money in these tax-free savings accounts, who should therefore transfer their often poorly-paying cash ISAs to a higher payer. Yet even with rate rises, many who have cash ISAs should ditch them. Let me take you through first whether an ISA is right for you, and if it is, how to boost your rate.

• The big question - do you pay tax on your savings interest? The personal savings allowance (PSA) was launched in 2016, meaning for basic (20%) taxpayers, the first £1,000/year of interest in any savings is tax-free. For higher (40%) taxpayers, it's £500 tax-free, and top 45% taxpayers don't get a PSA. So for years, with low savings rates, few have paid tax on any savings interest. Yet now, look at this graph...
  As interest rates have risen, you now need far less in top savings before you pay tax. At one point, over two hundred grand was needed. Today, for basic taxpayers it's £21,000 in the top 2yr fix, £39,200 in easy-access - and halve that for higher-rate taxpayers. And this is where cash ISAs come in...
  
  
• A cash ISA's just a savings account where interest is NEVER taxed. Neither does the interest count towards the PSA. You can put £20,000 in per tax year (so until 5 April), and then once in, it stays tax-free year after year. So if you're over the PSA limit, cash ISAs are a winner, but for everyone else, as they tend to pay less than normal savings, there's LITTLE POINT IN A CASH ISA UNLESS YOU'LL PAY TAX ON OTHER SAVINGS...
  
  Below I've lined up the top payers against each other. It's worth noting if you've had a cash ISA for years and aren't planning to use the money soon, fixes pay a lot more...
  
  

  Top normal savings vs top cash ISAs All accounts below have the full UK £85,000 savings safety guarantee
  	Top standard savings	Top cash ISAs
  Easy-access	- Skipton BS 2.55%* (min £10,000, max 2 withdrawals a year). If you pay tax on interest, it's equivalent to 2.04% at basic rate | 1.53% higher rate | 1.4% top rate - Zopa 2.15% (min £1, app-only)	- Coventry BS 2.25% (min £1, max 6 penalty-free withdrawals per year)
  1yr fix	- Kent Reliance 4.45% (min £1,000). If you pay tax on interest, it's equivalent to 3.56% at basic rate | 2.67% higher rate | 2.48% top rate	- Shawbrook Bank 3.9%* (min £1,000) - Santander 3.7%* (min £500) + £50 voucher if you transfer in £10,000+ of existing cash ISAs. The voucher is for Amazon, Aldi, Tesco or others. Factor this in and it WINS for £10,000-£25,000 of cash ISAs
  2yr fix	- Tesco Bank 4.77% (min £2,000). If you pay tax on interest, it's equivalent to 3.82% at basic rate | 2.86% higher rate | 2.62% top rate - Kent Reliance 4.75% (min £1,000)	- Kent Reliance 4.3% (min £1,000) - Santander 4.2% (min £500) + £50 voucher if you transfer in £10,000+ of existing cash ISAs. The voucher is for Amazon, Aldi, Tesco or others. Factor this in and it WINS for £10,000-£24,000 of cash ISAs

• Already have cash ISAs? Transfer to a top payer. Check what you're earning right now. If it's less, apply for a new cash ISA. Usually as part of the application, you'll be asked if you want them to transfer your existing cash ISA over for you (don't just withdraw the cash to move it, then it loses its 'cash ISA' status).
  
  
• Don't pay tax on savings? Most should ditch existing cash ISAs. I know for years until 2016 many had it drilled into them (often by me) that cash ISAs were nicer - but now people need deprogramming. If you don't and won't pay tax on savings interest, then just focus on the higher rates in normal savings, with two exceptions...
  
  - If you're close to paying tax on savings. If you're near the limit, as interest rates are likely to keep rising, keeping money in cash ISAs now can protect you from future tax.
  - You want to be able to withdraw from fixed cash ISAs (unlike normal fixes). Though there are big interest penalties.
  
  
• Some can boost interest further. Specialised accounts can pay even more if you qualify:
  - 50% bonus for many on universal credit or tax credits. See Help to Save.
  - 25% bonus for first-time buyers aged 18 to 39. See Top Lifetime ISAs.
  - Earn up to 5.25% on smaller amounts if you save monthly. See Regular savings.
  - Earn 5.12% on smaller savings. See Current account savings.
  - Prefer to invest? Higher returns, but more risk. See Stocks & Shares ISAs.

New. Cheapest MEGAFAST broadband and line deals...
213Mb Virgin fibre broadband & line for just '£18/month' - or you can go up to 900Mb (but you pay for it)

If you've a need, a need for (serious) speed, then this week it's all about you. We always tell you cheap broadband is about pouncing on short-lived promo deals, and this week's are both short and (very) zippy. The cheapest is nearly 10 times the speed but half the price many people are on. And you can go even faster, though you pay a lot more for it. Fast broadband is better for households with multiple users, serious downloads or gaming.

As a benchmark, the cheapest standard 38Mb fibre broadband & line is '£14/month'. Below we've only included deals available to at least a third of the country. All links go via our Broadband Unbundled comparison tool where you enter your postcode and see what deals are available in your area.

• Slow broadband? Test your speed - is it the Wi-Fi or the connection? Do a broadband speed check - first when using Wi-Fi, and then plugging your device into the router (if you can). If Wi-Fi's a lot slower, try our eight speed-boosters.
  
  
• At least 50% of customers must get the advertised speeds at peak times. All providers above also tell you the estimated max speed you're likely to get before you sign up.
  
  
• Switching usually only means about two hours' downtime. You're told the switch time, and most don't need an engineer to set it up - though about 40% switching to Virgin will (you're told before applying), as will those getting ultrafast speeds for the first time. A few leaving Virgin may need an Openreach engineer.
  
  
• Don't want to switch? Haggle. If you want to stay with your existing provider, use the deals in the table above as a benchmark price to help you haggle costs down. Not sure how? Read our full Broadband haggling tips guide.
  
  
• Members of cashback sites can sometimes undercut deals. In some cases, the cashback can mean these sites undercut promos elsewhere, though sometimes the deal differs - so check carefully. More in Top cashback sites.