Last chance to use your ISA allowance

There are now just a few days left to use this year’s ISA allowance, but if you leave it until the very last minute you risk missing out altogether.

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Savers and investors can invest up to £10,200 in ISAs this year, of which half can be put into a cash account and half into stocks and shares. Alternatively, you can invest the full amount in stocks and shares.

You must use your ISA allowance by 5 April , or you will lose it forever - but don’t assume that all providers will accept applications right up until midnight on this date. Here’s our guide to some of the best cash ISA deals currently available and the last dates by which you should submit your 2010/2011 ISA applications.

Best variable rate cash ISAs

The AA’s Internet Access ISA account pays an impressive 3.35% tax-free, which includes a bonus of 1.65% for the first year, so you may want to move your money after that.

You can only apply online for this account and applications should be submitted by 28 March, so don’t delay if you are considering investing. You can open the account with a minimum investment of £500 and can make unlimited withdrawals without penalties. Transfers from other cash ISAs are not allowed.

Santander’s Flexible ISA pays 3.30% and guarantees to track 2.80% above the Bank of England base rate for 12 months. The account can be opened with £1 and transfers from other ISAs aren’t allowed. Applications for this account can be made up to and including 5 April but if you are making an online or telephone application, Santander advises that you should do this by 28 March.

Other top variable rate ISAs include Barclays Golden ISA Issue 3, which pays 3.25% annual interest tax-free and can be opened with a minimum investment of £1.  This rate includes a bonus of 1.00% for the first year. Only existing Barclays’ current account customers can open this ISA online or by phone. Barclays is accepting ISA applications during business hours on 5 April in branches, and until 11pm online and via the telephone on 5 April. If you don’t have a current account, you’ll need to apply in a branch for this first.

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Best for transfers

The current best ISA for transfers from other providers is from Nationwide Building Society and pays 3.10%, which includes a 1.35% bonus for the first 12 months. The Nationwide e-ISA account can be opened with a minimum investment of £1.

You must have a Nationwide card account to be eligible for its e-ISA. If you don’t already have a qualifying account but want to invest your 2010/2011 cash ISA allowance in Nationwide’s e-ISA, the deadline for applications is midnight on 30 March. You can still open an e-ISA after this date, but there are no guarantees it will be opened in this tax year.

Existing Nationwide customers who already have an e-ISA have until midnight on 5 April to top up and invest this year's allowance.

West Bromwich Building Society’s online-only WeBSave ISA pays 2.85% tax-free annual interest on a minimum investment of £1,000. This account includes a 1.12% bonus payable until the end of February next year, so you may want to move your money at the end of this period. This account also accepts transfers from other providers.

However, West Brom has advised that online applications for this account should be made by 25 March, so you may have already missed the boat. Telephone applications for West Brom’s other ISAs should also be made by 25 March, but West Brom is accepting branch-based applications until April 5. Remember that you can only apply for the WeBSave ISA online.

Halifax’s ISA Direct Reward account also accepts transfers and pays 3.00% annual interest tax-free, or 3.20% if you are a qualifying Halifax current account holder. The account can be opened with a minimum investment of £1, but remember that after the first 12 months the rate drop to Halifax’s Direct ISA rate, which is currently just 0.50%. Halifax says it will accept ISA applications until 5 April, but funds must be in place by midnight.

Best fixed rate ISAs

Savers who are prepared to tie up their savings for a fixed period can earn higher rates of interest than with an easy access ISA. However, bear in mind that experts are predicting that interest rates are likely to start rising soon, so if you lock up your money for a long period of time, there is a risk your account may no longer look so competitive in a year or so.

The current-market leading fixed rate ISA over a four-year period is Halifax’s 4–Year Fixed Rate ISA Saver account, which pays 4.40% on a minimum investment of £500. Those looking to invest over three years might want to consider Northern Rock’s Fixed Rate e-ISA Issue 6, which pays 4.00%, again on a minimum investment of £500. Northern Rock says that applications for its ISAs should be made by 29 March, whether online, via the telephone or in branches.

Savers wanting to lock in for a shorter period of time can earn 3.50% with Halifax’s 2-Year Fixed Rate ISA Saver account, which requires a minimum investment. If you only want to tie up your savings for one year, then Northern Rock’s Fixed Rate e-ISA Issue 4 is paying 3.01% until 24 April 2012. Both these accounts require a minimum investment of £500.

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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