Savers and investors need to act fast if they haven't already chosen a cash ISA for 2010/11 as the current tax year ends on April 5.
The rules state that you can put anything up to £5,100, and often a minimum £1, in this tax year into an ISA (Individual Savings Account).
The account acts as a tax shelter as long as the money stays within it - with any interest earned being tax free.
Someone putting the maximum £5,100 in a cash ISA in this tax year at 3.50% earns £178.50 a year, says Andrew Hagger at Moneynet.co.uk.
Savers can open just one cash ISA with a single provider in any tax year - and because many of us leave it 'til the last minute, the most attractive offers are often rushed out in these final weeks before the deadline.
Santander has offered a two-year fix, while Halifax promises a 4.35% fix over four years. Post Office one, two and three-year fixed-rate accounts will be run by Family Investments.
Nationwide BS has an 18-month fix, promising 3.25%-3.55%; three years at 3.50-3.85%; and four years at 4- 4.25%. No part withdrawals are allowed, but the monthly income is important for people living partly off savings.
These figures need to be set alongside the rates on mainstream bank and building society accounts, which have often sunk as low as 0.10% - with the taxman on hand to grab his share too.
To enjoy the best ISA rates, investors need to have substantial sums invested: Accumulated over various tax years since the ISA regime was launched in 1999 by Gordon Brown when he was chancellor.
Barnsley BS, whose eight branches are not part of Yorkshire BS, has an online e-ISA paying 3.2% (Monthly income 3.15%). That rate is guaranteed until February 29 next year, so investors must check what happens after that.
Many people with only a small amount of savings tend to ignore ISAs altogether. The Nationwide BS thinks around two thirds of those eligible to open a cash ISA - aged 16 and older - do not bother to do so.
But the total value of cash ISAs usually grows steadily year by year, and money held within them is much more accessible than that held in pensions.
Indeed, when more workers in the private sector realise they have been switched into pension plans which are greatly inferior to final-salary schemes, ISAs will increasingly emerge as an alternative and supplementary method of saving.
Twenty years from now, many workers - particularly in the private sector - will retire with a job pension and an ISA pot alongside, which will either top up their income or cover special purchases such as cars and holidays.
Nationwide BS figures show that someone putting the maximum possible into a cash ISA over the past five years, including 2010/11, now has £18,300 locked away.
Even at the current relatively low interest rate of 2.50%, that means an income of £457.50 per annum, tax free.
Over the longer period, this benefit is turbo-charged.
According to the website moneysupermarket.com, a careful saver who has taken full advantage of the ISA cash allowance from the taxman since 1999 is now £3,300 richer if their money is in ISAs rather than an easy-access savings account from which the taxman takes a slice.
Kevin Mountford, at moneysupermarket.com, says: "Over time, a cash ISA can give a decent return with no risk and it should be the first account you open if you want a longer term place for your funds."
"Savers also have a better choice this year, as a number of building societies enter the market after playing a more muted role last year. Providers are being more aggressive than usual."
The average cash ISA rate is significantly ahead of last year, but still some way behind January 2009.
However Stefan Maryniak at uSwitch.com thinks the best rates on current cash ISAs are from lesser-known providers.
He says: "Consumers who don't shop around will miss out, but be aware that rates advertised will include a bonus which has a shelf life. If you are going to fix for more than a year, be sure you know what your rate will be in 12 months' time."
Maryniak's tips for the best ISAs include Aldermore Bank (4.01% fix, three years, £1,000 min); and the Principality BS e-ISA (4% one-year fix, but investors must take a stocks and shares ISA too).
But Andrew Hagger fears many long-term ISA savers are in a trap, losing hundreds of pounds a year.
"The focus in the ISA market is always on new products - which banks and building societies design for best buy charts," he says.
"This usually means rates drop away sharply on older ISAs - sometimes in one fell swoop, or perhaps more gradually. Many ISAs have bonuses expiring after a year."
"Savers are dazzled by new rates on offer, without realising that previous cash ISAs, possibly worth £30,000-£40,000 are earning little or no interest. When money builds up over several years, the loss of income can be sizeable."
On a £40,000 ISA pot, a rate of 3.50% generates income of £1,400 a year: At 0.10%, it produces only £40.
Hagger's 'blacklist' for low-paying ISAs includes Dunfermline BS (0.10% below £3,000); Halifax variable rate (0.10% below £21,000); Santander Easy ISA (0.10% below £27,000); Virgin Cash ISA (0.10%) and Nationwide BS Instant Access (0.25% below £10,000).
If you are in any one of those and you find a gleaming new ISA paying a good rate, check that your ISAs from previous years can be transferred into it to enjoy the new higher rate. But not all new ISA accounts accept transfers.
With rises in the Bank of England base rate also seen as imminent, savers face one other key decision: Should they go with a fixed-rate ISA, locking them in for at least a year, or a variable rate?
Currently, the best one-year fixes pay 0.20% more than the top variable rates. That gap could narrow, or vanish altogether, if base rate sees several rises in 2011/12.
The new Metro Bank, which opens its fifth branch in Tottenham Court Road in central London in March, offers an Instant Access variable-rate ISA, paying 2.35% and guaranteed to increase in-line with the Bank of England base rate until 2013.
Metro Bank's Paul Marriott-Clarke said his ISA delivers "what it says on the tin - it's a simple, great value product for customers who want to be able to rely on and trust their bank".
If you fix - Chelsea BS at 4% over three years looks good - you know exactly what you will earn at the start.
Of course while cash ISAs keep growing, the risks - and the rewards - are potentially greater on ISAs holding shares, or managed funds holding shares. We'll consider ideas for that sector next week.
Poundnotes
:: A rate war on personal loans looms following the launch by M&S Money of the first sub-7% rate since June 2008. On loans of £7,500 and above, M&S Money quotes 6.9%.
According to moneysupermarket.com, the average rate for the top 10 personal loans at £3,000 is 14.39% (10.6% in November 2007), and the average for £5,000 is 10.02% (7.41%).
Tim Moss, head of loans and debt at moneysupermarket.com, says: "At long last, the whole personal loan market is opening up. Many lenders are beginning to open their books to more consumers with more competitive deals, even below £7,500."
"Having an open and competitive loans market is vitally important to provide another option for consumers forced to look at other, more expensive, borrowing when banks tightened lending criteria. However, there is still a long way to go before we see the loans market return to normality - and the most competitive rates are still only available to those with excellent credit histories."
:: Barclaycard has offered the UK's first card charging 0% on balance transfers for 18 months, with a 2.9% balance transfer fee plus cashback for transfers of more than £3,000.
This was met by M&S Money with an offer of 15 months interest free credit on purchases - suggesting competition among credit card firms is set to hot up.
These moves mean the average promotional balance on the top five balance transfer credit cards rises to 16.6 months, the longest on record, says moneysupermarket.com.
The average promotional length on the top five purchase credit cards is now 13.2 months, also a record.
But Kevin Mountford at moneysupermarket.com advises cardholders to look closely at the balance transfer fees they will have to pay when they switch.
:: Having a baby is an expensive business, according to a new study.
Insurance and investment group LV= reckons the cost of raising a child through to 21 now tops £210,000 - more than £10,040 per year.
That includes £67,000 for childcare and £55,000 on education - including uniforms, after-school clubs and university tuition fees.
:: A growing number of older homeowners are signing up to home reversion schemes, which release money from their bricks and mortar, to pay off their original mortgage, says Bridgewater Equity Release.
The firm says that since the credit crunch, more homeowners have opted to use equity in their homes to become debt-free.
Others want cash for lifestyle uses, such as travelling or a new car, while some use it to fund a divorce and separation or for gifts to younger generations of the family.
Enquiries: Call 0845 1405 060 or visit www.bridgewaterequityrelease.co.uk.
:: A new online legal service offers free legal advice 24 hours a day, plus a guaranteed response to any online query within 60 minutes.
Depending on the enquiry, Right Solicitor can use the latest technology to match callers with an appropriate solicitor nearby.
To find out more visit www.rightsolicitor.co.uk.
:: High five savers
Phone No Rate Account Period Deposit Interest paid
Principality BS 0845 045 0452 4.85% Fixed Rate Bond 189 Five Year Bond £500 Yly
Aldermore 045 604 2678 4.80% (F) Fixed Rate Account Five Year Bond £1,000 Yly
Coventry BS www.thecoventry.co.uk 3.05% eNotice 30 Days £1,000 Yly
Dunfermline BS 0845 733 6688 3.00% 60 Day Notice 60 Days (B) £1,000 Yly
Cheshire BS 0800 243278 2.95% 30 Day Postal Saver 30 Day (P) £1,000 Yly
:: Top five borrowers
Phone No Rate Period Max% Adv Fee Incentive
HSBC 0800 494999 2.29% (rem) variable for term 60% £99 Yes
Hinkley & Rugby BS 0800 774499 2.44% for two years 75% £795 Yes
ING Direct 0845 032 8800 2.50% disc until 31/03/13 70% none Yes
First Direct 0845 610 0100 2.79% variable for term 65% £99 Yes
Furness BS 0800 220568 3.29% (disc) for three years 80% none Yes
Code:
*K- Operated by Internet, Telephone, or Post
*F - Fixed
*P - Operated by Post
*B - Operated by Post/Telephone
*T - Operated by Telephone
*W - Operated by Internet
*H - Operated by Internet/Telephone
*S - Available only to those aged 50 or over
*R - Available to those aged 60 and over.
:: Source: Money£acts - Tel: 01603 476 476 (All rates subject to change without notice).
