For those looking to save for something in particular, a cash ISA could be a good place to start with your savings account. While Help to Buy ISAs are ideal for those getting on the housing market for the first time, cash ISAs are a great way to save for the future. The interest on a cash ISA is also free from tax, so all the interest you earn, you keep. When it comes to choosing which account to set up a cash ISA, it’s best to look at the interest rates, with the top ones often paying 2.3 percent.
Everyone in the UK aged 16 or over gets an ISA allowance at the start of each tax year, and at the moment it’s £20,000.
Money Saving Expert Martin Lewis explains the different types of cash ISAs on his website, saying there are a number of different types of cash ISA accounts, each one just depends on your plans for using the funds.
The most popular options are: Easy access ISA, where you can withdraw money whenever you want, and a fixed rate ISA, where you are guaranteed a rate but mustn’t touch the cash for a set period.
The Money Saving Expert has the best easy-access cash ISAs listed on his website.
The Double Take E-ISA from Virgin Money pays 1.45 percent and can be opened with as little as £1, however, you can only make two withdrawals per calendar year.
You can also close the account at any time.
The bank’s Easy Access Cash ISA pays 1.43 percent on balances over £1,000.
It also allows unlimited withdrawals and it can be opened with £1,000.
However, if your balance drops below £1,000 you’ll earn only 0.25 percent interest.
For fixed rate cash ISAs, Martin advises the best deals are:
Cynergy will pay 1.73percent interest on balances over £500.
Their fixed length is one year.
Coventry Building Society
Coventry Building Society have a number of options for Cash ISAs, depending on how long you want to save for.
This bank is offering 1.9 percent interest and you only have to deposit a minimum of £1. This deal is for savers who don’t need access to their savings until 31st May 2021.
They also have an account which will pay 2.05 percent interest, but fixed until 31st May 2022.
And if you don’t need access to your savings until 30 November 2023, they have an account which will pay 2.30 percent interest.