Savers are being encouraged to check the interest rate on their cash ISA after new analysis revealed the best deals are now paying as much as 4.85%. Research from Which? found that the highest-paying five-year fixed cash ISAs currently offer 4.85% AER, while competitive rates are also available for people who do not want to lock their money away for quite as long.
Most cash ISAs beat inflation
The consumer group said its latest analysis found 81% of cash ISAs were paying more than June's 2.6% inflation rate, suggesting people with money sitting in poorer-paying accounts could benefit from shopping around.
According to rates sourced from Moneyfacts on August 14, Vida Savings and Leek Building Society both offered five-year fixed-rate cash ISAs paying 4.85%. Each requires a minimum investment of £1,000.
Shorter fixes and easy access options
Savers who would rather fix their money for a shorter period can also secure rates close to the market-leading figure. Vida Savings was offering 4.8% on its three-year fixed-rate ISA, 4.77% for two years and 4.7% for one year.
Those wanting easier access to their cash could get up to 4.61% through Sidekick's Cash ISA. The account can be opened with £1 through its mobile app, although the rate includes a 1.38% bonus for the first six months.
Tax-free savings and transfer rules
Cash ISAs allow people to earn interest without paying tax on their returns. Savers can currently put up to £20,000 across ISAs during the tax year.
Anyone considering moving an existing ISA should use the official ISA transfer process rather than withdrawing the money themselves. This involves completing a transfer request with the new provider, which then contacts the old provider to arrange the switch. Which? says the process should normally be completed within 15 working days.
Rates can change, so savers should check the terms, withdrawal restrictions and minimum deposit requirements before opening an account.
