Where To Find Top Rates For Your Cash Isa

Posted on: 19 March 2009 by Gareth Hargreaves

Wily savers should make the most of new accounts from banks and building societies. Desperate to attract money, they are coming out with accounts paying more than 3%.

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These offer a good deal against the 0.1% paid on hundreds of older accounts and the Bank of England base rate of 0.5%.

If you go for a top variable rate, make sure you check what it pays regularly and move your money once the rates get less competitive - when, for example, the initial bonus paid for a year runs out.

Most of the new top-paying accounts are cash Isas, as banks look to pull in savers seeking to use their £3,600 cash Isa allowance this tax year.

You have until 5th April to do this and earn tax-free interest - and if you fail to use it, you lose it. You cannot carry your unused allowance over into the next tax year.

This week sees the launch of Barclays' branch-based Golden Isa paying a variable rate of 3.55% on £1 or more, including a 1% bonus paid for the first year. You have easy access to your money but you cannot transfer existing Isa money into the account.

But beware: the bank's older Cash Isa pays just 0.1% to some savers, while its Tax Beater, once a best payer, pays 0.81%.

The 3% tax-free rate on Halifax's Isa Direct Reward is fixed for a year, so you'll be cushioned from any further falls. It also gives you access to your money - up to four withdrawals a year.

You can transfer existing Isa funds to the account and add to it when you want - within the cash Isa limits. It's available through its branches, over the telephone or the internet, and has a minimum investment requirement of £1,000.

Other good deals include NatWest internet-based e-Isa at 3.51% on £10,000 or 3.25% on £1. The bank has just opened up this account to transfers so you can move your existing Isa savings there.

Marks & Spencer's Advantage Cash Isa offers 3.1%, which includes a 1% bonus paid until April next year, minimum £100. But if you already have an M&S cash Isa - renamed Tracker Cash Isa - you can't transfer it to this better-paying account. Its Tracker Cash Isa rate fell to 0.5% this month.

NatWest/RBS Cash Isa Plus pays 3.51% tax-free on £1 or more. You cannot transfer your existing cash Isas into these accounts, available through branches, telephone or internet.

On taxable accounts, Barclays has a new branch-based easy access account, MoreForMore. At the same time, it has closed its Nestegg and Active Savings - currently paying as little as 0.04% interest after tax. But the new account pays only 0.4% (0.5% before tax) on balances up to £10,000.

It looks poor value against the latest version of Abbey's Instant Access Saver - version 3 - which pays 2.4% (3%) on £1,000 or more including a 1.2% (1.5%) bonus payable for the first year. You cannot open this account if you have run an Instant Access Saver with Abbey within the past 12 months.

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