Early bird ISAs

The new tax year has only just begun, but ISA providers are already battling to tempt savers to sign up to their accounts.

Aldermore, Nationwide and Principality building societies are among the providers who have launched new ISAs for the start of the tax year, paying rates of up to 2.75% tax-free.

This tax year, which started on April 6, you can invest up to £5,940 in a cash ISA, and the same amount in stocks and shares, or you can invest the full £11,880 allowance in stocks and shares.

However, from July 1, the introduction of the New ISA (NISA) will mean the overall limit will increase to £15,000. This sum can be invested entirely in cash if you want, or in a combination of stocks and shares and cash, or in stocks and shares alone.

Here’s a refresher of the best cash deals to transfer your current balance to, start saving in for the first time – or both.

First-time ISA savers

If you’ve never invested in a cash ISA before, you’ll first need to decide whether you are looking for an easy access account, or if you are happy to tie up your savings for a period of time.

The market-leading cash ISA for those looking for an easy access account is Nationwide Building Society’s Flexclusive ISA, which pays 1.75% on a minimum investment of £1. However, you need a Flex current account to be eligible for this account, and you cannot make transfers from existing ISAs.

If you don’t have a Nationwide current account, then the building society has just launched a new Regular Saver ISA, which is aimed at customers who want to save regularly to make the most of their tax-fee allowance. You cannot make transfers from existing ISAs into the Regular Saver ISA.

The account pays 2.50% tax-free and savers can make monthly deposits of between £1 and £1,250, so you can start saving now towards the increased £15,000 allowance which comes into effect in July. The account can be opened and operated in branches or online and you can make withdrawals whenever you want. 

Savers who are prepared to give notice before they take money out may alternatively want to consider  Earl Shilton Building Society’s 90 Day Notice Cash ISA, which pays 1.80% tax-free on a minimum investment of £10. Again this account doesn’t accept transfers from existing ISAs, so you can only pay in a maximum of £5,940 before July, and up to £15,000 after that.

Top cash ISAs for transfers

If you’ve got cash ISA savings languishing in an account which no longer looks competitive, you should transfer to a higher interest tax-free account. However, not all cash ISAs accept transfers, so you’ll need to hunt out those that will.

The market-leading variable rate cash ISA which accepts transfers is currently National Counties Building Society 3rd Issue 45 Day Notice Cash ISA, which pays 1.65% tax-free on a minimum investment of £3,000.

Interest rates on this account are tiered, so the more you can transfer into it, the more interest you’ll earn. The top rate of interest available is 2.00%, but you only earn this rate if you have £35,000 or more to invest. You will to give 45 days’ notice if you want to make a withdrawal, and the account can be operated online, in branches, by telephone or by post.

If you’re looking for easy access to your money, Santander’s Direct ISA Saver Issue 6 account might be a better bet. This account, which also accepts transfers, pays 1.60% on a minimum investment of £500, and you can make withdrawals whenever you want to.

Fixed rate ISAs

Savers who don’t need easy access to their savings may want to consider a fixed rate ISA. As the name suggests, these pay a fixed rate of interest for a set period of time, but you usually can’t make withdrawals.

Skipton Building Society’s Five Year Fixed Rate Cash ISA, for example, accepts transfers and pays a generous 3.00% tax-free on a minimum investment of £500 and can be topped up to the new £15,000 throughout July.

Principality Building Society has just increased the rate on its 5 Year Fixed Rate Cash ISA by 0.25% to 2.75% tax-free. The account, which accepts transfers from existing ISAs, can be opened with a minimum investment of £500, and the ISA can be topped up to the new £15,000 allowance when it comes into effect on July 1. You cannot make withdrawals from this account, and if you close the account early you will lose 360 days’ interest.

If you don’t want to lock up your savings for this long, there are plenty of shorter-term options available, including Halifax’s one-year ISA Saver Fixed account, which pays 1.65% again on a minimum investment of £500. If you decide to open this ISA, you have up to 180 days in which to pay funds into the account, so you will be able to top up your savings to the new £15,000 limit in July if you want to.

Santander’s two-year Fixed Rate ISA pays a tax-free rate of 2.00%, and you can open the account with a minimum investment of £500, or a zero balance if you are transferring in existing cash ISAs with a balance of at least £500. A higher rate of 2.30% is available to 123 current account, credit card or Santander Select customers. This account can be topped up until August 31 if you want to invest up to the new maximum £15,000 allowance.

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.

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