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Take advantage of higher cash ISA rates

The perils of misusing a credit card

The end of the tax year might not be until April 5 next year, but that doesn’t mean you shouldn’t think about your ISA now.

If you haven’t yet used your full cash ISA allowance of £5,760, it’s well worth doing so as soon as you can, simply because your savings will have longer to build up tax-free interest. And don’t forget, you can’t carry your unused allowance over to the new tax year.

What’s more, this month marks four years since the annual cash ISA allowance increased for those aged over 50. This means that if you took advantage of this new allowance by opening a fixed rate cash ISA, your account could be about to mature. In which case, it’s time to transfer your money to a new home.

But even if you are not in this position, it could still be time to move your tax-free savings if your existing cash ISA is now paying next to nothing in terms of interest.

Fortunately, in recent weeks, a number of providers have increased the interest rates on their cash ISAs, making it the perfect time to transfer your funds. So let’s look at what’s on offer.

Fixed rate cash ISAs

The advantage of opting for a fixed rate cash ISA is that the interest rate is fixed for the term of the account. So if you fix for two years, you know your savings rate will remain the same during those two years, even if interest rates fall. The downside is that you’ll need to leave your money untouched for the duration of the account, and you can usually only make one deposit, so they are no good if you want to save regularly.

Halifax has recently boosted the interest rates on some of its fixed rate cash ISAs. Its three-year fixed rate cash ISA now pays an annual equivalent rate (AER) of 2.50% (up from 2.25%), making it the market leading deal in this camp.

Halifax’s four-year deal now pays 2.60% (up from 2.30%), and its five-year fixed rate cash ISA pays 2.75% (up from 2.35%).

However, these are limited offers, so if you want to take advantage, act quickly and open your account before November 4. You can open the accounts with £500 or more and all allow transfers in from existing cash ISAs. What’s more, if you have £5,000 or more in savings with Halifax, you’ll be entered into its monthly Savers’ Prize Draw to potentially win £100,000.

Virgin Money has also unveiled three new fixed rate cash ISAs which could be good options for those with less than £500 to invest as they only require a minimum investment of £1. Again, they all allow transfers in.

Virgin’s five-year fixed rate ISA pays 2.75%, while its three-year option pays 2.20% and its one-year deal pays 1.85%. If you’re worried about locking up your money for too long, the one-year fixed rate ISA is a good place to start.

For a two year option, take a look at Aldermore’s fixed rate ISA which pays 2.15% if you have £1,000 or more to invest/transfer. Or Halifax’s offering pays 2.10% if you have £500 to invest/transfer.

Easy access cash ISAs

If you’d prefer to be able to access and add to your savings as and when you want to, an easy access cash ISA is a better option. However, bear in mind the interest rate will be variable, so could change at any time, and some rates include a bonus which expires after 12 to 18 months, causing your overall interest rate to drop.

First Direct’s cash ISA offers an impressive rate of 3.00%, but the big drawback is that in order to qualify for this rate, you’ll need to have £40,000 to transfer from an existing cash ISA. Otherwise you’ll earn between 2.20% and 0.50% depending on the amount invested.

However, if you do have a smaller amount to invest, the Post Office has recently increased the interest rate on its Premier Cash ISA from 1.75% AER to 1.80% AER. The rate includes a bonus of 0.90% for 18 months, so you’ll need to move your money after this time, and you can open the account with £100. It allows transfers in.

For more options, visit MoneySuperMarket’s cash ISA channel.

Don’t forget….

If you are transferring money from an existing cash ISA to a new one, be sure to check that the new ISA allows transfers in, and don’t withdraw the money yourself as you will lose your ISA’s tax-free wrapper. Instead, tell your new provider you want to transfer money in from an existing cash ISA and fill in a transfer form.

Also bear in mind that if you’ve chosen an easy access option and you’ve used up your full cash ISA allowance and you then withdraw money, you won’t be able to top your ISA back up until the new tax year. This also applies to smaller amounts. So if you paid in £5,000 and later withdrew £1,000, you wouldn’t be able to pay the full £1,000 back as, by doing so, you’d go over your limit of £5,760. Instead, you’d only be able to pay in the remaining unused limit of £760.

Data provided by moneysupermarket Best Buy Credit Cards - For Balance Transfers
The data displayed on this table was correct when published at 15:02 22/08/2014
Credit card provider Balance
Transfer
Purchases Representative
APR (Variable)
Card provider - Barclaycard

Barclaycard

Platinum Credit Card with Extended Balance Transfer

0.00%
33 months
2.99% fee
0.00%
6 months
18.90%

Representative Example:

If you spend £1200.00 at a purchase interest rate of 18.90% (variable) your Representative APR will be 18.90% (variable).

Apply

Card provider - MBNA

MBNA

Platinum Credit Card

0.00%
32 months
2.69% fee
0.00%
3 months
18.90%

Representative Example:

If you spend £1200.00 at a purchase interest rate of 18.90% (variable) your Representative APR will be 18.90% (variable).

Apply

Card provider - Barclaycard

Barclaycard

Platinum Credit Card with Balance Transfer

0.00%
32 months
2.79% fee
0.00%
6 months
18.90%

Representative Example:

If you spend £1200.00 at a purchase interest rate of 18.90% (variable) your Representative APR will be 18.90% (variable).

Apply

Data provided by moneysupermarket Best Buy Savings Accounts - For Easy Access
The data displayed on this table was correct when published at 15:02 22/08/2014
Savings account provider Interest
Rate (AER)
Min Investment Notice
Savings provider - Britannia

Britannia

Select Access Saver 6

1.4% 500 instant

Eligibility criteria:

Apply

Savings provider - Coventry Building Society

Coventry Building Society

PostSave Easy Access (2)

1.4% 500 none

Eligibility criteria:

Available to UK residents aged 16 or over.

Apply

Savings provider - Tesco Bank

Tesco Bank

Internet Saver

1.35% 1 none

Eligibility criteria:

Available to UK residents aged 18 or over.

Apply

Savings provider - Sainsbury's

Sainsbury's

eSaver Special

1.35% 1000 none

Eligibility criteria:

Available to UK residents aged 18 or over.

Apply

Savings provider - Post Office

Post Office

Online Saver Issue 11

1.3% 1 none

Eligibility criteria:

Available to UK residents aged 18 or over. Choose a monthly or annual interest option. You will need a linked account which must be a UK bank or building society current account in your name that accepts Direct Debits.

Apply

Data provided by moneysupermarket Best Buy Current Accounts - For Rewards
The data displayed on this table was correct when published at 15:02 22/08/2014
Current account provider Reward Overdraft
Rate (EAR)
Current account provider - first direct

first direct

1st Account

£100 cashback when you switch 15.90

Apply

Current account provider - Santander

Santander

123 Current Account

Up to 3% cashback on household bills 0.00

Apply

Current account provider - Halifax

Halifax

Reward Current Account

Up to £160 in the 1st year 0.00

Apply

Data provided by moneysupermarket Best Buy Loans
The data displayed on this table was correct when published at 15:02 22/08/2014
Loan provider Headline Rate Payment per month Total charge for credit Total amount you repay
Loans provider - The Loans Engine

The Loans Engine

4.60% £297.50 £709.82 £10709.82

Representative Example:

If you borrow £10000.00 over 3 years at a Representative APR of 4.60% fixed and an annual interest rate of 4.60% you would pay the above.

Apply

Loans provider - Fluent Money

Fluent Money

4.70% £297.92 £725.26 £10725.26

Representative Example:

If you borrow £10000.00 over 3 years at a Representative APR of 4.70% fixed and an annual interest rate of 4.70% you would pay the above.

Apply

Loans provider - Ocean Finance

Ocean Finance

12.30% £330.51 £1898.20 £11898.20

Representative Example:

If you borrow £10000.00 over 3 years at a Representative APR of 12.30% fixed and an annual interest rate of 12.30% you would pay the above.

Apply

Data provided by moneysupermarket Best Buy Mortgages - For Remortgage
The data displayed on this table was correct when published at 15:02 22/08/2014
Mortgage provider Interest
Rate (AER)
Max LTV Duration
Mortgage provider - HSBC Discount 60% LTV

HSBC Discount 60% LTV

1.49% 60% For 2 years

Apply

Mortgage provider - Tesco Bank Tracker 60% LTV

Tesco Bank Tracker 60% LTV

1.50% 60% Until 31/10/2016

Apply

Mortgage provider - Woolwich from Barclays Tracker 65% LTV

Woolwich from Barclays Tracker 65% LTV

1.65% 65% For 3 years

Apply

Mortgage provider - Tesco Bank Tracker 70% LTV

Tesco Bank Tracker 70% LTV

1.75% 70% Until 31/10/2016

Apply

Mortgage provider - Beverley Building Society Discount 65% LTV

Beverley Building Society Discount 65% LTV

1.75% 65% For 2 years

Apply

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