Cash ISAs are making a comeback for two reasons - better interest rates and more savers wanting to protect their money from the taxman.
Cash ISAs haven’t always kept up with the best savings deals on the market. Last year, easy-access rates on traditional savings accounts topped 5.5% while the best one-year fixed deals offered more than 6%.
However, due to the bank rate remaining at a 15-year high, millions of people are set to pay tax on their savings interest this year, which is making ISAs more attractive.
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The best easy-access cash ISAs are currently offering above 5%. Plus, you’re getting the added benefit of the tax-free wrapper, which shelters up to £20,000 of savers’ money from the taxman each tax year.
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The top product on the market right now is from Moneybox, with its 5.09% AER cash ISA, which launched last September.
Moneybox, a savings and investing app, has held the top spot for some months now, with it initially coming into our best-buy table a week after its launch at 4.75% AER.
In October, it hiked its rate further to 5% AER, and again on 21 November to 5.09% AER. According to data from Moneyfacts, no easy-access ISA has offered a rate as high as 5% since 2016.
Find out how the Moneybox cash ISA works, and if you're eligible to bag £25 cashback - but you’ll need to be quick as the offer expires soon.
How does the Moneybox cash ISA work?
Moneybox is offering 5.09% AER (variable) on its cash ISA, which includes a 0.94% bonus rate in the first 12 months.
As the rate is variable, it can change at any time. But the provider says it will inform its customers of any changes.
The account requires a minimum balance of £500, and as per ISA rules, you can save up to £20,000 each tax year (this allowance needs to be spread across all your ISAs, such as stocks and shares ISA).
This cash ISA isn't completely easy-access, as it only permits up to three withdrawals per year. On your fourth withdrawal, the rate you earn drops to 0.75% AER. The same rate applies if your balance falls below £500.
You have to open and manage the ISA on the Moneybox app. The good news is transfers in are permitted from ISAs held with other providers.
But, you will not be eligible for this ISA if you have already maximised your £20,000 annual ISA limit, or paid into another cash ISA this tax year.
Interest is calculated daily and paid annually on the anniversary of your account opening.
How to get £25 cashback with Moneybox
If you're an existing Moneybox customer, you'll get £25 cashback when you open a cash ISA or stocks and shares ISA with the app.
You can only take advantage of this offer if you have received a promotional email from Moneybox with the £25 cashback offer.
To be eligible, you must deposit at least £500 into a Moneybox ISA. Your ISA must hold a balance of £500 for at least 30 days after opening the account.
You can also transfer an existing ISA to either the cash ISA or stocks and shares ISA. If you make a transfer, it must be in progress or completed by midnight on 31 January.
Plus, if you open both a cash ISA and a stocks and shares ISA with Moneybox, you’ll qualify for £50 cashback.
The cashback will be paid within seven days after the 30-day period, or after your transfer is complete.
This offer is only around until the end of January, so you will need to move quickly if you want to bag the free cashback.
