Best cash ISA rates – which cash ISAs pay the most interest?

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If you want to put your money into a cash ISA, which accounts pay the highest rates? Read on to find the best cash ISA rates.

The best cash ISA rates – what to look for

As I write this, you’ll get a higher rate of interest on fixed rate cash ISAs. But be aware that you normally can’t take money out of these accounts until the end of the term.

SAVVY TIP: More importantly, you generally only have a month or so to pay money into these accounts. You can’t normally top them up or pay into them on a monthly basis.

Instant access cash ISAs

I’ve looked at banks and building societies’ own websites, as well as price comparison sites such as Moneyfacts and Moneysupermarket to find the best buys. If you use Moneysupermarket, make sure you choose ‘all the accounts’ if you are searching for a savings account, otherwise you’ll only be shown those that pay Moneysupermarket a commission.

Virgin Money Defined Access E-ISA pays 1.01% interest tax free on balances from £1 upwards. You’ll get this interest rate as long as you don’t take money out of it more than three times in a calendar year. If you do take money out of it more often, the interest rate drops to 0.5%.

Setting up and running the account: You can open and run the account online. You can pay money in by bank transfer, cheque or – if you go to a Virgin Money store – by cash.

Lets you pay in money from your existing cash ISAs? Yes. You can transfer in existing cash and stocks and shares ISAs from other providers.

Flexible ISA? No. This means that once you’ve paid in your full cash ISA allowance (of £15,240 in tax year 2016-17), you can’t top it up again if you take some money out.

Extras: You get access to Virgin Money lounges with free refreshments and wifi.

Interest paid? Interest is paid annually on March 11th.

NS&I Direct ISA pays 1% interest tax free on balances from £1 upwards. You can take money out whenever you want and there’s no penalty.

Setting up and running the account: You can open and run the account online or by phone.

Lets you pay in money from your existing cash ISAs? No.

Flexible ISA? No. This means that once you’ve paid in your full cash ISA allowance (of £15,240 in tax year 2016-17), you can’t top it up again if you take some money out.

Interest paid? Interest is paid annually on April 6th. You’ll be sent a statement every April which you can get by post or online.

Bath Building Society’s cash ISA pays 1% interest tax free on balances from £1 upwards. You can take money out whenever you want and there’s no penalty.

Setting up and running the account: You can open and run the account in a branch or by post.

Lets you pay in money from your existing cash ISAs? No.

Flexible ISA? No. This means that once you’ve paid in your full cash ISA allowance (of £15,240 in tax year 2016-17), you can’t top it up again if you take some money out.

Interest paid? Interest is paid annually on December 31st.

Melton Mowbray Building Society cash ISA pays 1% interest tax free on balances from £1 upwards. You can take money out whenever you want and there’s no penalty. You can only open this account if you’ve been a member of the society for five years or more or if you live in Nottinghamshire, Lincolnshire, Leicestershire or Rutland.

Setting up and running the account: You can open and run the account in a branch or by post.

Lets you pay in money from your existing cash ISAs? No.

Flexible ISA? No. This means that once you’ve paid in your full cash ISA allowance (of £15,240 in tax year 2016-17), you can’t top it up again if you take some money out.

Interest paid? Interest is paid annually on March 31st.

Regular Saver Accounts

If you don’t have a big wodge of money to put into a cash ISA in one go, a regular saver account is a better option.

SAVVY TIP: The headline interest rates are higher than with ordinary instant access cash ISA accounts, but you only earn that interest rate on the first month’s payment.

At the moment, regular saver cash ISAs are pretty thin on the ground. Here’s one that may be worth considering if you live near Stockport.

SAVVY TIP: The other option, if you’re disciplined enough not to spend the money, is to keep it in your current account.

Vernon Building Society Regular Saver cash ISA pays 1.6% interest tax free on balances from £1 to £25,000. You can take money out whenever you want and there’s no penalty. You can pay in between £25 and £500 a month. You must pay in at least £25 for 11 out of the 12 months and make no more than two withdrawals a year. If you don’t meet these conditions, the interest rate drops to 0.6%. The year runs from 1st April one year to 31st March the next.

You can only open this account if you live within a 25 mile radius of Stockport.

Setting up and running the account: You can open and run the account in a branch. You can pay in money by cash or cheque in a branch or by bank transfer.

Lets you pay in money from your existing cash ISAs? No.

Extras? If you’re a first time buyer saving for a deposit for your home, you’ll get 10% of the balance up to a maximum of £1,000 if you take out your mortgage with the Vernon Building Society.

Interest paid? Interest is paid annually on March 31st.

Related articles:

Tax-free savings allowance explained; interest of up to £1,000 a year tax free

How to transfer a cash ISA

The basics of cash ISAs; making the most of tax-free savings

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