Cash ISAs are mostly suitable for those who are saving money for short-term goals and might need quick access to their cash. However, to get the most out of your savings, it’s important to review your financial needs and open the cash ISA that best matches them. So, what is the best cash ISA at the moment? Let’s find out.
Who is offering the best ISA rates?
According to Money Saving Expert, Shawbrook Bank has the best easy access cash ISA with an interest rate of 0.61%. Opening an account requires a minimum deposit of £1,000.
However, it’s important to note that the account isn’t flexible, you can’t withdraw your money from the account and return it in the same tax year without it reducing your current year’s allowance. If this wouldn’t work for you, you could consider a flexible cash ISA from Ford Money, but at a lower interest rate of 0.5% and a minimum deposit of £1.
If you’re considering locking your money in for longer, you might try one of these options:
- OakNorth Bank has the best one-year fixed cash ISA at 0.96% and a minimum deposit of £1
- Newcastle BS has the best two-year fixed cash ISA at 1.3% and a minimum deposit of £500
- UBL UK has the best three-year fixed cash ISA at 1.41% and a minimum deposit of £2,000
- UBL UK has the best five-year fixed cash ISA at 1.76% and a minimum deposit of £2,000
Remember to check the terms of these accounts to ensure they’re ideal for you, especially on withdrawal penalties, when you can access interest, whether interest is compounded and how transfers are made.
Are cash ISAs safe at the moment?
Generally, cash ISAs are considered safe because the only way the balance in your account can be reduced is if you withdraw the cash. However, if inflation continues to increase and you’re not on the best interest rate, the value of your money will decrease.
Cash ISAs are also protected by the Financial Services Compensation Scheme (FSCS), with a protection limit of £85,000.
Is it worth having a cash ISA at the moment?
The short answer is yes, mainly because your returns are shielded from tax. However, it’s important to consider your personal financial needs and whether a particular ISA would meet them.
It would also be best to keep a close watch on inflation. Remember, cash saved in a cash ISA may lose value if inflation rises. Take some time to think about your savings goals first, then decide whether a cash ISA or a different type of ISA would be most ideal. Beyond a cash ISA, your options are a stocks and shares ISA, an innovative finance ISA and a lifetime ISA.
Saving money in a cash ISA for short-term goals and emergencies is wise. However, for longer-term goals, a stocks and shares ISA may offer better yields – but keep in mind that there are risks involved. It is even possible to lose your savings, so you need to do your due diligence. If you’re a beginner, it might be prudent to check out the Motley Fools’ guide to share dealing for beginners first.
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About the author
Victor is a freelance writer who loves to read and write about personal finance and related disciplines with the aim of educating people to make better financial and investment decisions.
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