The best cash Isas – December 2022
Cash Isas may be making a comeback as rates creep up – here are the best cash Isas on the market today.
If you’re hoping to take advantage of higher interest rates coming back to the cash savings market, then you may be looking for one of the best cash ISAs to grow your money.
The best cash ISAs on the market today now offer rates of up to 4.65%, though you’ll need to be prepared to lock your money away for two years. It may also be possible to earn an even higher rate if you’re prepared to lock your money away for longer.
While it might be tempting to lock in these high rates now, it looks as if the Bank of England will be raising interest rates further over the coming months. So, a cash ISA with unlimited withdrawals might be a good option – allowing you to switch to a higher rate if one comes along in the future.
Cash ISAs operate in the same way as an ordinary savings account, but you don’t get charged tax on any interest you earn. You can save up to £20,000 a year in one type of account or split that allowance across different types of ISA accounts – such as a stocks and shares ISA. A stocks and shares ISA may be a good option if you want to save for a longer period – five years or more.
Some ISA accounts are also what’s known as “flexible ISAs”. This means you can withdraw money from your account and put it back in the same tax year without it affecting your annual allowance.
Below are the best cash ISA accounts available for easy access, and for 12- and 24-month fixed-rate accounts.
The best cash ISAs: easy access
Easy access cash ISAs do what they say on the tin, letting you access your savings without penalty.
| Account | AER | Minimum investment | Flexible Isa? | Notes |
|---|---|---|---|---|
3% | None | Y | Only available to Virgin Money current account holders | |
2.5% | £1 | Y | Online account | |
| Cynergy Bank Online ISA | 2.5% | £1 | N | Online account |
| Scottish Building Society Cash ISA | 2.5% | £100 | Y | Open by post or in branch |
The best cash ISAs: one-year fixed rate
If you’re happy to lock your cash away without any withdrawals for a year, then you can earn a higher rate – in most cases, you’ll also need at least £1,000 to open these ISAs. Here are the best one-year fixed-rate ISAs available now.
| Account | AER | Minimum investment | Notes |
|---|---|---|---|
3.97% | £1,000 | No withdrawals during the term, although Castle Trust will consider special circumstances (a fee might apply) Castle Trust will increase the interest rate within 14 days of opening if it decides to raise the rate on new products | |
3.81% | £2,000 | Interest is paid upon maturity to an account nominated by you when you open your ISA. It has to be in your name. You can open it online, by post or in branch. | |
3.79% | £1 | You can open the account online. Rates are fixed until the maturity date. |
The best cash ISAs: two-year fixed rate
If you have savings you’re happy to lock away for at least two years, you’ll find rates on cash ISAs above 4%.
| Account | AER | Minimum investment | Notes |
|---|---|---|---|
4.65% | £5,000 | No partial withdrawals are allowed and if the account is closed before the end of the first year no interest will be paid The account can be opened online, in branch or by post | |
| Loughborough Building Socity 2 Year Fixed ISA | 4.15% | £20,000 | Open in branch or by post. Partial withdrawals are not allowed. The interest rate is fixed. The account is available to new and existing members. |
| Virgin Money 2 Year Fixed ISA | 4.11% | £1 | Rates are fixed until the maturity date. You can open an account online. You can withdraw money from the account but cannot put money back in. Withdrawals made within the fixed rate period are subject to a charge equivalent to 90 days' loss of interest on the amount withdrawn. |
What you need to know about the best cash ISAs
When choosing a cash ISA there are two main factors to look out for: how long you are comfortable locking your cash up for and the interest rate.
- Easy access ISA accounts allow you to withdraw funds without incurring a penalty.
- Fixed-rate cash ISAs offer a fixed rate of return – usually higher the longer you are prepared to lock your money away. But note: if you withdraw money before the end of the term, then you are likely to be penalised, usually with a reduction in the rate of interest.
Generally speaking, the longer you leave the money untouched, the more interest you can earn. Many ISAs are classed as ‘flexible’, meaning you can replace any funds you withdraw in the same tax year without affecting your annual ISA allowance – which is currently £20,000.