The rates on a number of the leading deals have been cut in recent weeks as providers shift their attention away from ISAs to other product types. The average rate on the top five-paying cash ISAs has dropped from 3.21% to 2.99% over the past week, according to research we compiled at moneysupermarket. And that's despite the fact that the Bank of England base rate has remained unchanged since March.
Kevin Mountford, head of banking at moneysupermarket.com says: "Typically the ISA season is squeezed into the five or six weeks in March and April, when banks and building societies compete hard to attract money from savers who have left it until the last minute to take advantage of this valuable tax break before the tax year ends on April 5.
"But this year the tail has been longer as providers have sought to try and capitalise on the low interest rate environment and attract money from those looking use their ISA allowance early in the new tax year."
However, recent changes to ISA rates suggests provider focus is changing: Barclays, has removed the bonus on its "Golden ISA." The account had been advertising a market-leading rate of 3.61%, but this included a 12-month bonus. New applicants will not receive the bonus, so the rate they will receive is now 2.58% (existing customers will continue to benefit from the bonus for the remainder of the 12-month period).
And Barclays isn't the only bank to have reduced ISA rates in recent weeks. NatWest has lopped 1 per cent of its e-Isa, with rates falling from 3.25 to 2.25%. First Direct has been even more brutal, slicing rates on its e-ISA from 3.1 to 2%; while Marks & Spencer has reduced rates on its Advantage ISA from 3.1 to 3.02%.
There are a few better paying cash ISAs: Currently topping the "best buy" tables, for cash Isas is National Counties Building Societies, paying 3.26 per cent. Meanwhile Abbey and ING Direct are both paying 3% - although the ING account includes a hefty 1.47% bonus for the first 12 month.
Savers can invest up to £3,600 a year into a cash ISA; this will rise to £5,200 from next year (those who are 50 or over will be able to put this amount in from November this year).
However, with the onus moving away from cash ISAs, for the time being at least, now may not be the best time to use your 2009-2010 allowance if you haven't already done so - competition will return to the ISA market later in the tax year.
Mountford added: "The recent moves suggest banks and building societies are re-focusing on other products, so it could be time for savers to concentrate on other types of savings account such as fixed rate bonds and easy access accounts."
So what alternatives are there?
The main competition in the savings market at the moment is in the fixed rate bond arena.
The AA's Telephone Five-year Fixed Rate Bond is paying a market-leading 4.50%. However with, interest rates at a historic low, many savings experts warn against locking your money away for so long in case rates start rising again within that time, leaving you stuck on a deal that becomes uncompetitive.
If you would prefer a shorter-term bond, ICICI Bank has the leading two-year bond at 4.35%, while Birmingham Midshires is offering 4.25% to those willing to lock their money away for two years.
If you'd prefer a one-term bond, ICICI's one-year Fixed Rate Hisave account has the highest rate at 4.0%.
Of course, savers should only make use of these fixed-rate products if they already have "rainy day" savings to hand in an easy access account. If all your money is locked up in fixed-rate accounts then it may not be able to be accessed at all - or at the very least without paying hefty penalties - in an emergency.
The best-paying easy access account are still paying quite low rates, but perhaps this is not surprising given the low interest rate environment. Currently topping the best buys is ING Direct, paying 2.75% on £1. Sainsbury's is paying 2.6% (although savers need a minimum of £5,000), while Alliance & Leicester, Abbey and Egg are among those offering easy access accounts at 2.5% - although all of these include substantial bonus payments, which will disappear after the first year.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
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