What ISA currently has the best interest rate?

http://www.moneysavingexpert.com/savings/best-cash-isa

You'll struggle to get above 5.43%. But remember that the SLC rate is 3.8% this year, so although you won't be in profit over your whole loan, on the £7k that you are talking about, you will be in profit as long as you have one above 3.8%. (As you aren't able to pay off the whole loan at the moment, the remainder of it is fairly irrelevant.)

But if you're not a taxpayer, you could consider non-ISAs http://www.moneysavingexpert.com/savings/fixed-rate-savings

crittertog wrote: »

Perhaps I'm missing something here, but the interest rate on the SL was 4.8% this year, and is dropping (as the rb10 said). As ISA's are tax-free, you'd need a rate equal to the SL rate in order to break even on that amount in the ISA.

Yes, what you are missing is adamt's other post, http://forums.moneysavingexpert.com/showthread.html?p=16431553 Here, he explains why he wants to have 5.43% interest - he only has £7k of his total £10k debt, so 5.43% of £7k would make him enough interest to pay for the whole £10k debt.

However, I don't think that's an entirely logical way to look at it, as you have the options to:

(i) Save the £7k and keep the full £10k debt; or
(ii) Pay off the £7k and keep £3k debt.

Either way, the last £3k is still going to be owed to the SLC. So you will be paying interest on that regardless.

Therefore, I would aim to be in profit on the £7k that you actually have. Well, aim for the highest interest rate possible, I suppose.

By the way crittertog, 4.8% was last year's rate, this year (i.e. until 31/8/09) it is 3.8%