Why you should review your cash ISA now

The new tax year has arrived which means the annual ISA allowance has reset.

With the fresh opportunity to put up to £20,000 into your ISAs, now could be a good time to review your savings accounts and make sure you’re getting the most out of your money.

While you may think that your ISA savings are already stashed away in accounts that provide decent growth, there is a real risk that this isn’t happening.

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Yorkshire Building Society recently revealed that millions of cash ISA savers are missing out on hundreds of pounds worth of potential interest by holding their money in cash ISAs that pay an interest rate of 1.5% or less.

It could be because the interest rates have been reduced since the accounts were opened, or because the money has been left there despite more competitive rates being launched on the market.

Some providers have enticed customers with temporarily high interest rates, via a limited-time bonus rate, meaning your money could be languishing because you did not realise that the bonus has come to an end.

Harriet Guevara, chief savings officer at Nottingham Building Society, says it is “crucial to review your cash ISA regularly” to make sure your savings are working as hard as they can, because interest rates and market conditions can change.

Guevara says it is a good idea to “compare rates across providers and make sure your ISA still aligns with your financial goals and risk tolerance”. She adds: “If your circumstances or goals change, it might be worth adjusting your strategy by diversifying with other ISA products.”

With that in mind, it is worth taking stock of whether you’re getting the best savings rates, and considering moving your money from low-paying accounts, especially if the rates are below inflation.

Make sure that your bonus rate account is working for you

Some of the best cash ISAs on the market right now are ones which include an introductory bonus rate for a certain number of months, especially for new customers.

For example, the highest interest provided by a cash ISA right now is Plum’s 5.92%. While that looks great on paper, once the bonus has expired, your ISA holdings won’t be working quite as hard.

That is because after three months, the rate will fall by 2.38 percentage points to just 3.54%. While that is not necessarily a bad interest rate, it is still far below the best offerings on the market.

Similarly, the second best cash ISA is Chip which offers a rate of 5.90% (including a bonus rate of 1.58%), while Moneybox pays 5.67% (bonus rate of 1.47%). Once the bonus period ends, the rates will drop.

If you opened an account that included a bonus rate in the last tax year it is well worth checking to see whether you can get a better rate elsewhere, as it may have come to an end.

Currently, Tembo Money and Monument Bank both offer fairly competitive interest rates on cash ISAs that do not include bonus rates – these are 4.80% and 4.76% respectively.

Why maximising the ISA limit could be worth doing sooner rather than later

There has been lots of speculation recently that the annual tax-free cash ISA allowance could be reduced to just £4,000.

While changes weren't announced in the Spring Statement, chancellor Rachel Reeves has since said her team is looking into reforming the cash ISA. It’s been suggested changes could incentivise more people to move their money into a stocks and shares ISA to give a boost to the UK’s stock market.

If the Treasury decides to reform the cash ISA, the details of this would likely be announced at the Autumn Budget.

For cash ISA savers who want to maximise their £20,000 allowance, acting sooner rather than later could be a good idea. That way, if the allowance is cut to £4,000 later in the year, you will potentially have already deposited an extra £16,000.

Guevara at Nottingham Building Society echoes this, telling MoneyWeek: “With the government reviewing the current cash ISA regime, it’s more important than ever to act early and make the most of this valuable savings tool while the rules remain in place.”

“Starting early is key,” Guevara adds. “By contributing to your cash ISA at the beginning of the tax year, you give your savings the maximum amount of time to grow tax-free. This can be especially important for long-term goals such as buying a home or preparing for retirement. The earlier you start, the more your savings can work for you.”

Should you move your cash ISA holdings into stocks and shares?

If you are concerned about your money not yielding enough interest, moving your cash ISA savings into a stocks and shares ISA is one way that you may be able to achieve higher returns.

However, this entirely depends on the stocks that you invest in and how the overall stock market performs.

Global stock markets are currently in a poor state after Donald Trump announced a new tariff regime on 2 April – or as he dubbed it, “Liberation Day”.

The S&P 500, a stock market index of 500 large companies in the US, fell 12% in the week following the announcement, while the FTSE 100, which tracks the performance of 100 large firms in the UK, fell by over 7% in the same period.

Nevertheless, the average stocks and shares ISA returned around 11.86% in the year between February 2024 and 2025, according to Moneyfacts. Those gains trump even the highest annual interest rate offered on a cash ISA.

Furthermore, recent analysis by Hargreaves Lansdown found that ISA investors could be £34,000 better off over a decade if they maxed out their stocks and shares ISA allowance at the beginning of every tax year rather than waiting until the last minute.

While the nature of the stock market means there is no guarantee that your stocks and shares ISA will realise the same returns this year, it might be an option you want to consider.

Experts suggest that, when investing, it is best to take a long-term view and not be worried about day-to-day market fluctuations. Hargreaves Lansdown says investors ought to judge the performance of their portfolios over five or more years.

How to transfer a cash ISA

In order to make your money work the hardest it can, you may need to transfer your cash ISA savings to another provider.

This is usually a relatively straightforward process that does not affect your annual allowance, and typically takes no longer than 15 working days.

Nevertheless, it is important to know the ins and outs of the process before you decide to move your savings to another ISA provider. MoneyWeek has a full guide on how to transfer an ISA that answers the most common questions about the process.

It's important to follow the transfer process, rather than withdraw the money from one cash ISA and then pay it into another. If you do the latter, you will lose that part of your annual ISA allowance.