020 7189 9999
Opening hours
Mon - Fri: 7.45am to 6pm (Thurs 8pm)
Sat: 9.30am - 1.30pm
Request a call back
  • Home
  • News
  • Importance of reviewing your Cash ISAs

Importance of reviewing your Cash ISAs

Importance of reviewing your Cash ISAs

Following recent press coverage of Barclays' decision last month to move 2.3 million savers to a new cash ISA product – with two-thirds of these customers now finding that they are on a worse rate than before – savers are again reminded of the importance of ensuring they are getting the very best deals on their cash ISAs. And Barclays is by no means alone. In the last year RBS, HSBC and Natwest have all either moved millions of customers to a new deal or withdrawn accounts offering special introductory bonus rates.

With interest rates still at historically low levels it can be easy to dismiss a relatively small difference in the rates as insignificant, but a 1% variance in the interest rate on a deposit account worth £20,000 is equal to more than £1,000 in interest when compounded over five years.

So what options are available to ISA savers in low-rate accounts?

1) Switch to an alternative variable Cash ISA account

There are a number of websites - including our own - which provide a list of the best ISA rates currently available. Most cash ISAs are 'variable rate', meaning the rate received will change depending on the current Bank of England base rate and providers' discretion. Many of these accounts may include bonus periods after which the interest rates may be lowered.

We have also provided an Annual Gross Equivalent Rate which annualises the tax benefits and compounded growth on income earned over the term of the investment.

Cash ISA

AER

As of

Notice

Min Deposit

Introductory Bonus

Gross Equivalent rate 20% income tax

Gross Equivalent rate 40% income tax

Coventry BS: Branch Instant ISA

2.00% 05/09/2014

Instant

£1

N/A

2.50%

3.33%

BM Savings: ISA Extra Issue 11

1.55% 05/09/2014

None

£1

1.05% bonus for 12 months

1.94%

2.58%

National Savings & Investments: Direct ISA

1.50% 05/09/2014

None

£1

N/A

1.88%

2.50%

Skipton BS: Online Bonus Cash ISA 3

1.50% 05/09/2014

None

£1

1.05% bonus for 12 months

1.88%

2.50%

2) Switch to a Fixed Rate Cash ISA account

If you are prepared to lock-in your money for a period of time then a Fixed Rate account might be a better option, as the rates on offer normally beat those offered by variable accounts.

Cash ISA

AER

As of

Term

Min Deposit

Introductory Bonus

Gross Equivalent rate 20% income tax

Gross Equivalent rate 40% income tax

Tesco Bank: Fixed Rate Cash ISA

1.65% 05/09/2014

1yr

£1

Fixed

2.06%

2.75%

Metro Bank: 1 Year Fixed Rate Cash ISA Issue 8

1.50% 05/09/2014

1yr

£1

Fixed

1.88%

2.50%

Buckinghamshire BS: 1 Year Fixed Rate Cash ISA issue 50

1.25% 05/09/2014

1yr

£100

Fixed

1.56%

2.08%

Santander: Direct ISA Saver (Issue 8) 1.00% 05/09/2014 1yr £500 Fixed 1.25% 1.67%
Principality BS: 2 Year Fixed Rate Cash ISA Issue 127 1.85% 05/09/2014 2yr £500 Fixed 2.31% 3.08%
Saffron BS: 2 Year Fixed Term, Fixed Rate Members' Cash NISA 1.85% 05/09/2014 2yr £500 Fixed 2.31% 3.08%
Metro Bank: 2 Year Fixed Rate Cash ISA Issue 3 1.75% 05/09/2014 2yr £1 Fixed 2.19% 2.92%
Furness BS: 2 Year Fixed Rate ISA Issue 88 1.70% 05/09/2014 2yr £1,000 Fixed 2.13% 2.83%
Metro Bank: 3 Year Fixed Rate Cash ISA 2.00% 05/09/2014 3yr £1 Fixed 2.50% 3.33%
Furness BS: 3 Year Fixed Rate ISA Issue 89 1.90% 05/09/2014 3yr £1,000 Fixed 2.38% 3.17%
Halifax: 4 Year ISA Saver Fixed 2.10% 05/09/2014 4yr £500 Fixed 2.63% 3.50%
Principality BS: 5 Year Fixed Rate Cash ISA Issue 129 2.75% 05/09/2014 5yr £500 Fixed 3.44% 4.58%
Skipton Building Society: 5 Year Fixed Rate ISA 2.75% 05/09/2014 5yr £500 Fixed 3.44% 4.58%
Metro Bank: 5 Year Fixed Rate Cash ISA 2.25% 05/09/2014 5yr £1 Fixed 2.81% 3.75%

Halifax: 5 Year ISA Saver Fixed

2.20% 05/09/2014

5yr

£500

Fixed

2.75%

3.67%

Source: Bestinvest

Not all accounts accept transfers so it is worth checking with the bank or building society concerned before requesting forms.  You should also check whether your current provider levies any penalties for transferring out. It is important that you initiate any transfer through the new provider, rather than withdraw the money or close the account yourself, to ensure the ISA remains intact.

3) Transfer to an Investment ISA

Since the abolition of the distinction between cash and stocks & shares ISAs, we have seen an increasing number of people look to transfer their cash ISA money into their investment portfolios within the ISA wrapper. Whilst not a reliable indicator of future returns, with the dividend yield on the FTSE 100 and average redemption yields on investment-grade corporate bonds currently being strong, the current returns on offer can be appealing to those who are willing to accept some risk to the capital values. We will be happy to help with any transfer you may wish to make into an investment ISA through Bestinvest.

An ISA is a valuable wrapper and it’s important that savers make the most of the tax efficiency by achieving the best returns they can. If you would like to discuss your options further please do contact your usual adviser or our client services team on 020 7189 9999.

The value of your investment can go down as well as up, and you can get back less than you originally invested.

The Bestinvest Online Investment Service, including any account analysis and investment reports provided by our guidance services, is an online execution-only dealing service for investors who want to make their own investment decisions. It does not provide advice on the suitability of products and investments; if you are unsure about the suitability of any investment you should seek professional advice. Clients of our Investment Advisory Service and Managed Portfolio Service can use the website to obtain current valuations of their investments but cannot trade on these accounts online and should call their adviser if they wish to discuss changes to their investments.

Past performance or any yields quoted should not be considered reliable indicators of future returns. Restricted advice can be provided as part of other services offered by Bestinvest, upon request and on a fee basis. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex; they may also have risks relating to the geographical area, industry sector and/or underlying assets in which they invest. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

Issued by Bestinvest (Brokers) Limited (Reg. No. 2830297), which is authorised and regulated by the Financial Conduct Authority. Financial services are provided by Bestinvest (Brokers) Limited and other companies in the Tilney Bestinvest Group, further details of which are available here. This site is for UK investors only.
© Tilney Bestinvest Group Ltd 2016.

Version: RC1027.44113