Best Cash ISAs for the 2017/18 tax year
It's the start of a new tax year and that means we all get a fresh ISA allowance that lets us save tax free.
The 2017/18 ISA subscription limit has jumped to £20,000 and can be invested in Cash, Stocks and Shares and/or using an Innovative Finance ISA.
If you're interested in investing part or all your 2017/18 ISA allowance in cash, we've gathered the best rates available.
Are Cash ISAs still worthwhile?
You might think there's no point in saving into a Cash ISAs anymore.
The rates on offer aren't great, and the new Personal Savings Allowance (PSA) means you can earn up to £1,000 tax-free interest from any savings or current account, effectively negating the ISAs unique selling point.
However, the humble Cash ISA still holds two attractive features for long-term savers.
First, it doesn't count towards your PSA, meaning there's no limit to the amount of tax-free interest you can earn each year.
Second, it's open to all savers – unlike the PSA, which isn't an option for additional-rate taxpayers and is capped at £500 for higher-rate taxpayers.
Of course, you could potentially earn a far better return and keep the tax-free benefits by investing in a Stocks and Shares ISA instead.
However, not everyone is happy taking on the risk of investing in the stock market. Others might prefer a combination of the two.
So, the Cash ISA can still play a part in your long-term savings plan.
Getting the best deal
To get the best Cash ISA rates, there are a couple of things you should know.
The top deals tend to be available to people who already have products with a financial institution, so have a good look at what your bank and its competitors are offering to suss out what you could be eligible for.
To help you get started, we've rounded up the best instant access, notice and fixed-rate Cash ISA accounts that are widely available.
Compare Cash ISA rates to find the best deal to suit your needs.
Top instant-access Cash ISAs
These are the top rates on offer if you want to easily get your hands on your cash at any time.
ISA | Rate | Minimum deposit | Bonus | Notes | Access |
Coventry BS Easy Access ISA (5) | 1.05% | £1 | None | Transfers and new subscriptions. | Online, branch, post, phone |
RBS Instant Access ISA | 1.05% | £20,000 | 1% for 12 months on balances of £20,000 | Transfers and new subscriptions. | Online, branch, phone, app |
NatWest Instant Access ISA | 1.01% | £20,000 | 1% for 12 months on balances of £20,000 | Transfers and new subscriptions. | Online, branch, phone, app |
1.00% | £1 | 0.35% for first 12 months | New subscriptions only. | Branch, post, phone |
Top notice Cash ISAs
Some accounts require you to give a little warning before you take money out of the account.
Account | Interest rate (AER) | Minimum deposit | Bonus | Notes | Access |
|---|---|---|---|---|---|
Al Rayan Bank 60-Day Notice Cash ISA | 1.00%* | £250 | None | Transfers and new subscriptions. 60 days' notice required for withdrawals. | Online, phone, branch, post |
Charity Bank Ethical 33-Day Notice Cash ISA | 0.90% | £250 | None | Transfers and new subscriptions. 33 days' notice required for withdrawals. | Online, post |
*Expected profit rate
Top fixed rate ISAs
Let's move onto fixed-rate Cash ISAs, which lock up your money for a certain period of time.
With providers slashing rates and the Bank of England indicating that interest rates aren't likely to rise rapidly in the short term it may be worth locking in now before they fall even further.
Here are the best buys ordered by interest rate.
Account | Interest rate (AER) | Minimum deposit | Length of fixed rate | Notes | Access |
|---|---|---|---|---|---|
Principality BS 5 Year Fixed Rate Cash ISA Issue 170 | 1.95% | £500 | Five years | Transfers and new subscriptions. | Online, branch, post |
Principality BS 3 Year Fixed Rate Cash ISA Issue 169* | 1.85% | £500 | Three years | Transfers and new subscriptions. | Online, branch, post |
Yorkshire BS Fixed Rate e-ISA to 30.4.19 | 1.25% | £100 | Two years | Transfers and new subscriptions. | Online |
1.13% | £500 | One year | Transfers and new subscriptions. | Online |
*Only available to open in branch due to high demand
Rates have been coming down consistently in recent years, so there's a strong argument for fixing for five years before rates fall much further. The only risk you run here is missing out on a potential rate rise before your fixed-rate period is up.
ISA options
You can save some or all of your annual ISA allowance in a Cash ISA and earn interest tax-free.
But you also have the option of putting some or all of your allowance into a Stocks and Shares ISA.
You can also put money in an Innovative Finance ISA which lets you keep returns on investments made via peer-to-peer loans tax-free.
Lending Works recently launched the first one at an impressive 4.5%. You can also get an IFISA from HNW Lending for 7%-15%, depending on how much risk you want to take.
There are also other options, for example if you want to save for your child's future or want to set money aside for retirement.
Compare stocks & shares ISAs at loveMONEY.com (capital at risk)
