How YOU can bag a top 5% Isa - and the rules you must follow to boost your savings
Savvy savers will know that cash Isa rates are nudging upwards with providers vying for our custom on easy access accounts.
Recent rate raisers include Plum, Moneybox and Chip while Trading 212 still sits up with the best payers at 4.85 per cent to 5.01pc.
It should be simple to get the best out of your cash Isa but it can be tricky and time-consuming to navigate.
Since the introduction of Isas 26 years ago, there have been plenty of rule changes.
There are so many differences in what providers offer that you must go further than looking at the rate to make sure it works for you and your lifestyle.
Is the account flexible? Can I take money out whenever I need to and how long does the top interest rate last?
Providers are not all the same - some will let you take money out and replace it - as long as you do so in the same tax year - without affecting your £20,000 cash Isa allowance. Others do not - despite government rules saying that you can.
Your provider will tell you whether it is a flexible Isa or not but often you’ll find the answer hidden in the terms and conditions.
Before putting your money in an Isa, check to see if it is a flexible account
Flexibility is vital for those savers who use their full £20,000 cash Isa allowance each year.
You can dip in and out of your savings during the year and earn tax-free interest.
You can, for example put in £10,000 during this tax year and then take out £3,000. If your Isa is flexible your remaining allowance is £13,000. If it is not, it’s £10,000.
If you look to switch your flexible provider to another, make sure you replace any money you want to before you move.
The key rule is that you must replace the money in the same Isa account from which you took it.
Some cash Isas let you take money out as often as you want while others restrict the number of times you can do so.
Other Isas come with a bonus (which only lasts a year) so you will have to move your money when the time is up or put up with a poorer rate.
Last week, Plum raised its rate to 5.01 pc, including a bonus for the first year which boosts the rate from the basic 3.79 pc. It restricts you to three withdrawals a year and if you make more your rate drops to 2.5 pc. Chip pushed its rate up to 4.85 pc for new customers which includes a bonus payable for 12 months on top of its standard 4.58 pc.
Meanwhile Trading 212 pays 4.9 pc with no bonus or withdrawal restrictions while Moneybox’s 5 pc limits you to three withdrawals a year and includes a 0.55 percentage point bonus payable for a year.
Chip and Trading 212 are both flexible Isas. Moneybox and Plum are not.
Some products from the large providers are not flexible Isas, including NatWest Cash Isa, HSBC Loyalty Cash Isa, Co-op (now part of Coventry BS) Cash Isa, Santander Easy Access Isa and Virgin Money (now part of Nationwide) Defined Access Isa.
Top rate online flexible Isas with no withdrawals restrictions include Monument Bank at 4.76 pc but you need £10,000 to open an account. Ford Money pays 4.35 pc on £1 plus. In the high Street Newcastle BS Double Access Isa at 4.25 pc restricts you to two withdrawals a year.
Don't keep more than you need in your current account. We have a staggering £300 billion kept in these accounts earning no interest.
I urge you to move at least some to a savings account to earn interest. When you need it, you can move it back into your current account - often within a couple of hours.
