Our savings picks: This is Money’s five favourite best buy cash Isas
Every little helps: Savings rates might be low but at least an Isa means interest is tax-free
Our assistant editor Lee Boyce picks his five favourite cash Isas for savers in 2019 – essential reading to help you choose a top savings account for your money.
This top Isa round-up has keeping our readers updated on the best savings deals since 2014 – and is kept up-to-date throughout the year – bookmark it for the very latest developments.
How an Isa works and why you should have one
Each year in April, savers are given a fresh Isa allowance that qualifies for tax-free interest.
For the 2019-20 financial year, which began on 6 April 2019, the limit is £20,000.
You can transfer Isa money whichever way you wish between an investment account to savings account, whereas previously you could only shift it from saving to investments.
Although cash Isas don’t currently offer fantastic rates, it is still worthwhile opening one to shield money away from the taxman.
Isa rules state you can only contribute to one Isa per tax year.
You can also transfer an old Isa for better returns. Here’s a quick guide to Isa saving.
It is possible to switch your current year’s cash Isa if you move the entire amount, but it is far simpler to get your choice right in the first place.
Rates are low and that makes the best Isa more important
Banks and building societies should be apologising to savers for the slim pickings on offer here.
Savings rates really are dire at the moment and unfortunately, institutions are doing little to shelter savers from the assault of the low interest rate environment.
The cut to 0.25 per cent for the base rate, launch of a new funding scheme to pump cheap money to banks, and expansion of quantitative easing, has made things even worse.
Many now ask themselves why bother?
Yet when rates are low it becomes even more important to make sure you are getting as much as you can from your savings.
We also think an Isa is still worth having, despite the new tax-free savings interest allowance of £1,000 a year for basic rate taxpayers and £500 for higher rate taxpayers.
It’s tough to get that much interest now, but one day rates will rise.
Money sheltered in an Isa will deliver a tax-free income, even above that £1,000 level and if you are building up a long-term pot, you may one day be very grateful for that.
And who knows if the personal savings allowance will be around forever – it is much more likely to disappear than the Isa wrapper.
You may also want to look into stocks and shares version of an Isa – how to choose the best (and cheapest) DIY investing Isa.
Our five favourite Isas:
Yorkshire BS, easy-access*, 1.35% [full details]
– Facts: £100 to open
– Transfers in: Yes
– This is Money says: This account from Britain’s third biggest building society is the top ‘easy access’ rate. However, it isn’t strictly easy-access – savers are limited to making withdrawals on just one day a year. After 12 months your money is transferred into a Limited Access Saver account.
Charter Savings Bank, one-year fix, 1.41% [full details]
– Facts: £5,000 to open
– Transfers in: Yes
– This is Money says: The challenger bank is offering the best one-year deal – but it requires quite a chunky deposit to open. A number of other providers are offering 1.4 per cent, with much lower deposit requirements, including Metro Bank.
Metro Bank, two-year fix, 1.6% [full details]
– Facts: £1 to open
– Transfers in: Yes
– This is Money says: Metro offers the top two year tax-free rate. It can be opened in branch – money is FSCS protected up to £85,000.
Cynergy Bank, easy-access, 1.31% [full details]
– Facts: £1 to open
– Transfers in: Yes
– This is Money says: This account from the challenger bank is now the top easy-access rate without limit on withdrawals. It is FSCS protected.
Metro Bank, five-year fix, 1.85% [full details]
– Facts: £1 to open
– Transfers in: Yes
– This is Money says: This is the best rate you can get on an Isa – but it requires fixing for five years. It can be opened in branch, or over the phone if you hold a current account with the bank.
THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS