Cash ISAs: The Best Currently Available List

jaceyboy

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Highest earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

Most people will be pulled into paying tax now as the interest rates are higher, so ISA's will be the best for most from now on...

TiVo_Lad

jaceyboy said:

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Highest earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

Most people will be pulled into paying tax now as the interest rates are higher, so ISA's will be the best for most from now on...

Assuming you're not a higher rate taxpayer and therefore get the full £1,000 tax-free interest allowance, you'd need to put away almost £25K at the current market-leading EA account (Tandem at 4.1%) before you started paying tax on your interest. I'd wager most folk can't put their hands on £25K to put away.

jaceyboy

TiVo_Lad said:

jaceyboy said:

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Highest earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

Most people will be pulled into paying tax now as the interest rates are higher, so ISA's will be the best for most from now on...

Assuming you're not a higher rate taxpayer and therefore get the full £1,000 tax-free interest allowance, you'd need to put away almost £25K at the current market-leading EA account (Tandem at 4.1%) before you started paying tax on your interest. I'd wager most folk can't put their hands on £25K to put away.

I think there are many out there though who do have far more than £25k to put away, so will start paying tax....

pookey

It all depends on what you have in savings and the rates your getting.

 I realised  towards the end of last year that with the rise in interest I would likely have to pay tax on interest for this tax year if I didn't put some money into ISA's. I managed to get the YBS at 4.5% which is flexible and variable which I opened in March (was 4.25% at the time but increased shortly after opening)

The rate is very good for me so I opened another in April for this tax year. 

When I did my research last year I think MSE said it was around 40k in savings to reach the 1k limit, now it's 25k and with the rate going up it looks like a lower amount in savings would be needed to reach the limit. 

alternate

Banks know you are often better off after taking tax in to account, so shave off some of that saving for themselves.  They would no doubt put it down to the higher costs associated with ISA - intra bank transfers, HMRC reporting and the mandated exit clauses required for fixed rate ISA.

Eirambler

The banks' argument is that there is more paperwork and admin involved with an ISA than with a regular savings account. And that's probably true to a point. But also, there is less demand for ISAs as most people don't need them and therefore there is less competition among providers.

Marvel1

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Top earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market outside an ISA to achieve a bigger return.

If the ISA rate is 4%, you are a higher rate tax payer and earn more than 500 of interest a year the ISA is worth it unless you find a bank paying you 6.64% in interest.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

I have £25,000 to put away, could be possibly be £28,000 maxmium.

Looking at a 1 year fixed ISA at 4.70%

I am a basic-rate taxpayer = 1.25

4.70 x 1.25 = 5.88

I would need to find a normal savings account at 5.88% minimum to choose a normal savings account over the cash ISA I'm looking at?

bristolleedsfan

Eirambler said:

The banks' argument is that there is more paperwork and admin involved with an ISA than with a regular savings account. And that's probably true to a point. But also, there is less demand for ISAs as most people don't need them and therefore there is less competition among providers.

Some providers pay same rate on ISA fixed as non ISA fixed, Virgin Money pay higher rates on  ISA fixed than non ISA fixed, 

pookey

Marvel1 said:

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Top earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market outside an ISA to achieve a bigger return.

If the ISA rate is 4%, you are a higher rate tax payer and earn more than 500 of interest a year the ISA is worth it unless you find a bank paying you 6.64% in interest.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

I have £25,000 to put away, could be possibly be £28,000 maxmium.

Looking at a 1 year fixed ISA at 4.70%

I am a basic-rate taxpayer = 1.25

4.70 x 1.25 = 5.88

I would need to find a normal savings account at 5.88% minimum to choose a normal savings account over the cash ISA I'm looking at?

Yes but also be aware that if you did find an account with this rate and put 25k into it you would need to pay tax on the interest over £1,000 so it would be better to put some of it in an ISA as its tax free savings 

kaMelo

Marvel1 said:

pecunianonolet said:

jaceyboy said:

Why are cash isa rates are so low compared to easy access accounts??

Because ISA's are only really worth it if you have to pay tax on your interest. Almost everyone has a personal free allowance of either 500 (higher earner) or 1000 (basic rate tax payer). Top earners don't have any allowance, so the more tax you pay, the more attractive the ISA is.

You can now take the ISA rate and multiply it with the figures below and it shows you what interest rate you would need to earn on the market outside an ISA to achieve a bigger return.

If the ISA rate is 4%, you are a higher rate tax payer and earn more than 500 of interest a year the ISA is worth it unless you find a bank paying you 6.64% in interest.

"How do I compare cash ISA rates to normal savings rates if I pay tax?

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.

Yet some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA."

https://www.moneysavingexpert.com/savings/best-cash-isa/ (bottom of the page)

I have £25,000 to put away, could be possibly be £28,000 maxmium.

Looking at a 1 year fixed ISA at 4.70%

I am a basic-rate taxpayer = 1.25

4.70 x 1.25 = 5.88

I would need to find a normal savings account at 5.88% minimum to choose a normal savings account over the cash ISA I'm looking at?

Essentially yes but note that you can't put more than £20,000 of new money into an ISA so will have to put any excess into a non ISA, ideally the highest available account that suits your needs.