Best Cash ISA: Who is paying top rates of interest?

A cash ISA is a savings account but unlike regular savings accounts, any interest you earn is free of any tax. If you are already using up your personal allowance, then saving into a cash ISA will allow you to keep more of your gains.

You can save up to £20,000 into a cash ISA each tax year, anything over and above that amount will be subject to tax at your regular rate.

The personal savings allowance refers to the amount of money you can earn from interest without having to pay tax on those earnings. Remember, that within a cash ISA, this isn’t an issue as your earnings are protected from the taxman. However, when using regular savings accounts, anything over the personal allowance is subject to tax. The personal savings allowance is as follows:

• Basic rate taxpayers – £1,000 in interest per tax year
• Higher rate taxpayers – £500 in interest per tax year
• Additional rate taxpayers – no personal savings allowance

They are the same! All the rules and regulations surrounding the product remain the same regardless of who the provider is. The main difference between the platforms I have recommended in this article, and the high street banks, is that the cash ISAs here offer better interest rates.

No, there is no limit — you are free to transfer your cash ISA as many times are you like. In fact, many savers use this strategy to chase higher bonus rates or better interest deals.

There are a couple of points to remember, though:

• Always use the official transfer process and let the new provider initiate the transfer. Don’t withdraw the money yourself, or you risk losing the ISA tax benefits.
• Check if the provider has a lock-in period (e.g. 90-day notice) or penalties on fixed-rate ISAs if you exit early.
• Watch out for exit fees. None of the providers in our ‘Best’ list above apply exit fees. But they may be applied by other platforms.

Completely safe. All these platforms are authorised and regulated by the Financial Conduct Authority (FCA) and in addition offer protection to the value of £120,000 by the Financial Services Compensation Scheme (FSCS).

There are two types of saving accounts – easy access, and fixed term. Fixed term means you will commit to leaving your money untouched in the savings account for a fixed period of time, usually in exchange for a better interest rate.

Conversely, easy access allows you to deposit and withdraw money whenever you like. What is interesting about this, is that at the time of writing this page, easy-access cash ISAs are offering the leading rates and there is therefore no advantage to locking your money away for a fixed term.

This depends on your age. If you are between the ages of 18 and 39, then a Lifetime ISA is a much better option as it attracts a government bonus of 25% on every deposit up to the value of £1,000 a year. You can either use this account to accumulate interest, or place your money into the stock market in order to grow a deposit.

For more information on Lifetime ISAs, and to find the best providers with the best returns at the lowest costs, go to my article here.

Yes, and you should! However, it is really important that you don’t just withdraw your funds and deposit them with a new provider as this will inadvertently affect your ISA allowance. Contact the provider you wish to transfer to and ask for their assistance in doing an ISA transfer.