However, the good news is Virgin Money has just launched three new competitive fixed rate cash ISAs, which could be well worth snapping up. So let's take a closer look.
What's the deal?
Virgin Money has unveiled three new fixed rate cash ISAs. These are as follows:
All three cash ISAs can be opened with £1 and allow transfers in from other cash ISAs. Withdrawals are permitted but are best avoided as you'll have to fork out up to 180 days' interest as a penalty.
There are two versions of each account – one version can only be opened online and the other can be opened by post or phone.
Who are they good for?
The three cash ISAs from Virgin Money are a great option for those looking to shelter their savings from the taxman, no matter whether you are opening your very first cash ISA or are looking to transfer existing ISA funds to a better account.
They are also a good choice for savers seeking a guarantee that their interest rate won't fall for a year or more and those who won't need access to their savings during that time.
One of the main catches with these accounts is that none of them is market leading – though, that said, they are not far off.
If you're after a one-year fixed rate ISA, you can get a higher rate of 2.00% with Britannia's one-year fixed rate ISA, but you must be a Co-operative or Smile current account customer to qualify and, if you're not transferring in funds from existing ISAs the minimum opening balance is the full cash ISA allowance of £5,760.
Those looking for a three-year fixed rate cash ISA could consider Halifax's ISA Saver account which pays 2.50%. You will need £500 to open it and transfers in are permitted, but withdrawals are not. The account can be opened online, by phone or in branch.
And if you're happy to lock up your savings for five years, the Leeds Building Society 5 Year No Access ISA pays an annual rate of 3.05% and can be opened with £1. Transfers in from existing cash ISAs are permitted, but withdrawals are best avoided unless you're prepared to sacrifice 180 days' interest. The account can be opened by phone or in branch.
As already mentioned, another catch with the Virgin ISAs is that you must leave your money untouched for either one, three or five years. Accessing your funds before the term of the account is up will result in a hefty penalty – 60 days' interest for the one-year ISA, 120 days' interest for the three-year ISA, and 180 days' interest for the five-year ISA.
There are also restrictions on the number of deposits you can make, so the Virgin Money ISAs are not suitable for those looking to invest in their account on a regular basis. Virgin says you can add to your account for at least 30 days after opening it, but any deposits you wish to make after this may not be accepted as the accounts could be withdrawn at any time. Remember too that you can only invest up to £5,760 into a cash ISA this tax year.
What's the verdict?
If you're looking for a competitive home for your tax-free savings and you're prepared to leave your funds untouched for one, three or five years, Virgin Money's new range of cash ISAs is well worth considering.
But if you'd prefer to be able to get your hands on your cash and add to your savings whenever you want to, you'll be better off plumping for an easy access cash ISA. Use our cash ISA channel to compare the best options and read my article for further tips on choosing an ISA.
If you've used up your full ISA allowance for this tax year and you're looking for an alternative place to stash your spare cash, you could consider peer-to-peer lending. Because this means you lend directly to consumers and small business and side-step the banks, there’s potential to earn higher returns. The downside is the Financial Services Compensation Scheme (FSCS) which protects the first £85,000 of your savings, does not apply to peer-to-peer lending.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct