4 The Sunday Times March 18, 2018 ISA SPECIAL Cash is no longer king – but can still have cachet changed this. The PSA allows basic-rate can be earned by your cash Isas will You should not taxpayers to earn up to £1,000 in tax-free increase each year, provided you keep interest from ordinary taxable accounts, using your annual Isa allowance — ignore the poor while higher-rate payers can earn up to whereas the amount of tax-free cash £500 without paying any tax. As soon as allowed by the PSA has remained the relation of Isas savers realised they could earn interest same since its introduction two years tax-free regardless of what kind of ago. Nor does interest earned by a cash Poor relation: cash Isas may not provide the best returns, but there is still a place for them in your savings portfolio despite pitiful rates, account they chose, the amount of new Isa count towards your personal savings money deposited in cash Isas plummeted allowance. some of the best rates at the moment are so you can maximise the interest you make one withdrawal a year without pen- writes Jill Insley — by almost £20bn in the 2016-17 tax year Adams at Savings Champion said: from the challenger banks and building earn while you are waiting.” alty. They pay 1.3% to new customers compared with the previous year. “Cash Isas should not simply be dis- societies.” OakNorth bank is paying 1.53% on its who have been with the society for less ash Isas may pay rock-bottom The number of new accounts slumped missed out of hand. While many savers However, Adams argued that while one-year fixed-rate cash Isa. The mini- than a year, while the Loyalty Single interest rates, but there are by 1.6m to 8.5m over this period. now receive interest tax-free because of some higher-paying deals have already mum deposit is £1,000 but the account Access Isa, for those who have been still good reasons to save in Rachel Springall of the financial prod- the introduction of the PSA, the value of been launched this year, “there is a dan- also accepts transfers in. Nationwide customers for a year or more, them, say financial experts. ucts comparison site Moneyfacts said: this may diminish in time. ger in waiting for the outlook to get much For those who can tie up their money pays 1.4%. However, if you make more People have turned their “2017 was the worst year we have ever “If and when rates improve, the better”. Hold back, he added, and “you for longer, Charter Savings Bank offers than one withdrawal, the interest rate backs on cash Isas during the seen for the interest paid on cash Isas. amount of savings needed to breach the could be missing out on better returns in the top-paying Isa, fixed at 2.25% for five will drop to 0.5%. The accounts can be past two years in favour of They have been crippled by low interest PSA will reduce and so more savers will the interim. years on balances of £1,000 or more. opened with a minimum of £1, but also standard savings accounts — rates and the introduction of other tax-ef- go over their PSA level — not forgetting “It would be far better to take a bal- Charter offers the “best buy” variable- accept transfers in from existing Isas. and no wonder. The best var- ficient ways of saving.” that those who are additional-rate tax- anced approach: keep some of your rate cash Isa, paying 1.31%. Savers can For the latest rates on savings iable rate Isa, offered by Savers who do not use their annual Isa payers don’t get a PSA anyway.” money in variable-rate accounts to take gain access to their money subject to pro- accounts, including cash Isas, check out Nationwide building society, pays 1.3%, allowance lose it for ever, which may not For now, however, no cash Isa is offer- advantage of improvements as and when viding 95 days’ notice. the Best Buys page in the Sunday Times Cbut the best easy-access non-Isa account, seem a problem right now. However, ing an interest rate that comes even close they happen, but also consider some of Nationwide building society’s varia- Money section every weekend. from ICICI bank, offers 1.35%. those who reject this tax-free scheme in to the consumer prices index inflation the top fixed-rate accounts available now, ble-rate Single Access Isas allow savers to The two-year fixed rate Isa offering the favour of a higher-paying standard rate of 3%. That means, tax-free or not, biggest return, from Al Rayan Bank, is your money will be losing value while it is paying 1.7%; the best two-year fixed-rate held in an Isa. bond, from the Swedish bank Ikano, pays Adams explained: “The nearest you BEST BUYS - CASH ISAS FIXED 1-YEAR 2.1%. If you compare Isas and standard will get to it at the moment is by tying up savings accounts with equivalent terms, a your funds for five years at 2.25%. That Provider AER Gross Transfers in Notice/Term Min investment Interest paid standard account will always come top. said, while you may not be able to beat it, OakNorth Bank 1.53% 1.52% Yes 12 -month bond £1,000 Monthly Tom Adams of the advisory service Some of the best you should still try to minimise the effect Savings Champion explained that banks of inflation by seeking out and switching Al Rayan Bank 1.51% 1.50% Yes 12-month bond £1,000 Quarterly and building societies blame the lower rates are from the to the best possible deals.” Virgin Money 1.50% 1.50% Yes 24.03.19 £1 Yearly interest rates they offer on the need to After seven years in the doldrums, allow savers access to their money if they challenger banks some cash Isa interest rates have finally Charter Savings Bank 1.46% 1.46% Yes 1-year bond £1,000 Anniversary want it — even if early withdrawals are increased. Bank of England data pub- Tesco Bank 1.45% 1.45% Yes 1-year bond £1 Anniversary subject to loss of interest. and building lished by The Money Charity shows that “Banks say they cannot rely on the average cash Isa interest climbed to 0.91% Paragon Bank 1.45% 1.45% Yes 1-year bond £500 Anniversary funds in a fixed-rate cash Isa staying with societies in January — an increase of 0.55 percent- Aldermore 1.45% 1.44% Yes 1 -year bond £1,000 Monthly them for the full term. There is no age points on the previous month. This Ford Money 1.40% 1.40% Yes 18-month bond £500 Anniversary requirement for this on a fixed-rate was the biggest month-on-month bond,” he said. “There are also fewer account could regret it in the long term. increase since records began in 2011. Ford Money 1.36% 1.36% Yes 1-year bond £500 Anniversary ‘challenger’ banks offering cash Isas, and Springall pointed out that while Isas Savers may be tempted to wait to see AA 1.36% 1.36% Yes 1-year bond £500 Anniversary these recent entrants . are currently the have been an established part of the sav- whether interest rates rise further, before main force in the savings market for ings environment for nearly 20 years, opening a new cash Isa or switching exist- improved rates and competition.” other tax-efficient schemes have come ing cash Isas to a new provider. Springall Although the rates paid on cash Isas and gone, scrapped at the whim of what- said: “We are expecting more activity in have long lagged behind those on ordi- ever government was in power at the the Isa arena this year, as it already seems BEST BUYS - CASH ISAS FIXED 2-YEAR nary accounts, until two years ago, savers time. She said: “Savers looking away from that some providers are preparing to still opted for them because for most peo- Isas will miss out on the long-term bene- attract customers looking for a better rate Provider AER Gross Transfers in Notice/Term Min investment Interest paid ple they offered the only opportunity to fits that holding one provides, particu- — so savers may not want to commit to a earn interest tax-free. larly as there is no telling how long the long-term fixed deal. Al Rayan Bank 1.70% 1.70% Yes 2-year bond £1,000 Quarterly The introduction of the personal sav- PSA will last.” “Savers may want to consider brands Paragon Bank 1.67% 1.67% Yes 2-year bond £500 Anniversary ings allowance (PSA) in April 2016 The amount of tax-free interest that away from the high street providers, as Charter Savings Bank 1.67% 1.67% Yes 2-year bond £1,000 Anniversary Virgin Money 1.66% 1.66% Yes 24.02.20 £1 Yearly Aldermore 1.65% 1.65% Yes 2-year bond £1,000 Anniversary Ford Money 1.57% 1.57% Yes 2-year bond £500 Anniversary Coventry BS 1.55% 1.55% Yes 31.05.20 £1 Yearly Bank and Clients 1.55% 1.55% Yes 2-year bond £1,000 Anniversary AA 1.51% 1.51% Yes 2-year bond £500 Anniversary Principality BS 1.50% 1.50% Yes 2-year bond £500 Anniversary BEST BUYS - CASH ISAS FIXED 3-YEAR AND OVER Provider AER Gross Transfers in Notice/Term Min investment Interest paid Charter Savings Bank 2.25% 2.25% Yes 5-year bond £1,000 Anniversary United Bank UK 2.21% 2.21% Yes 5-year bond £2,000 Anniversary Furness BS 2.20% 2.20% Yes 5-year bond £1,000 Anniversary Virgin Money 2.15% 2.15% Yes 24.03.23 £1 Yearly Principality BS 2.10% 2.10% Yes 5-year bond £500 Anniversary Virgin Money 2.00% 2.00% Yes 24.03.21 £1 Yearly Coventry BS 2.00% 2.00% Yes 31.05.22 £1 Yearly Nationwide BS 2.00% 2.00% Yes 5-year bond £1 Anniversary Dudley BS 2.00% 2.00% Yes 5-year bond £100 Anniversary Skipton BS 2.00% 2.00% Yes 5-year bond £500 Anniversary BEST BUYS - CASH ISAS VARIABLE Provider AER Gross Intro bonus Transfers in Notice/Term Min investment Interest paid Charter Savings Bank 1.31% 1.31% No Yes 95 days £1,000 Anniversary Nationwide BS 1.30% 1.30% No Yes None £1 Anniversary Marsden BS 1.30% 1.30% No Yes 120 days £5,000 Yearly Coventry BS 1.25% 1.25% No Yes 30 days £1 Anniversary Al