The best cash Isas for last-minute transfers
It’s not too late to take advantage of your Isa allowance, says Ruth Jackson. Here are the best options for your cash.
It's not too late to take advantage of your Isa allowance. Here are the best options for your cash.
There are only a few days left until the end of the tax year, when any unused individual savings account (Isa) allowance will disappear. But if you haven't yet paid into a cash Isa this year, it isn't too late.
You have until midnight on 5 April to invest your 2017/2018 Isa allowance of £20,000. Unlike many other tax allowances, unused Isa allowances can't be carried over to other tax years, so use it or lose it. If you just want somewhere to dump your Isa allowance quickly while you decide where you really want it (once the money is in an Isa, you can transfer it to a better-paying cash Isa or move it into an investment or innovative finance Isa), then you could go for an instant-access Isa. (Note that it's generally best not to wait until this point in the tax year to do this, as you are not benefiting from a full year's worth of interest-free growth.)
The best rate you can get with instant access is from Nationwide, which is offering 1.3%, but note that you can only make one withdrawal a year. This account accepts transfers from existing Isas and has no minimum deposit. If you think you might need to access your cash more frequently than that, then Paragon has an instant-access Isa paying 1.25%.
However, always make sure you check with your own bank too, as some offer special Isa accounts to loyal customers. For example, Nationwide customers can get a single-access Isa paying 1.4%. But at the same time, don't just assume your bank's loyalty rate is worth bothering with. HSBC offers its Premier customers an instant-access Isa paying 0.75%, which is more like a kick in the teeth than a reward, given that there are numerous other cash Isas that beat that rate.
You can also boost your interest rate by going for a fixed-rate account. By law, Isa providers have to give you access to your money, so even a long-term fixed rate bond has to allow withdrawals. This means you could grab that higher interest rate and still move your money if interest rates rise, or you simply need to access your cash. Just make sure you factor in how any withdrawal penalties could affect your overall return. The top rate available on a cash Isa is Halifax's five-year fix, which pays 2.25%, but access your money early and you'll lose 365 days interest. The minimum deposit is £500 and the account also accepts transfers from existing Isas. The added benefit of this account is that it is eligible for the Halifax Savers Prize Draw, as long as you have at least £5,000 in the account. The draw takes place every month and you can win up to £100,000.
If you think you may want your money early, a better option may be Virgin Money's four-year bond. This only pays 2.05% interest, but the withdrawal penalty is far lower, at 120 days' interest. Another option may be to go for a one-year bond, so you have the freedom to move your money penalty-free if the interest rates are looking better this time next year. Al Rayan Bank is offering the best one-year bond with a rate of 1.51%.
Also, don't forget your children under-16s can have a Junior Isa (Jisa), with an allowance of £4,128 this tax year. Money paid into a Jisa can't be accessed until the child turns 18, when it will be transferred into an adult cash Isa in their name. For young children, an investment Jisa is probably better as it has a long time to grow, but if you do want cash, the best rate is 3.5% from Coventry Building Society. The account can't be operated online; for that, Nationwide is best, at 3.25%.
Pocket money church collection plate 2.0
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