Cash ISAs vs standard savings accounts

RG2015

I remember a few years back Cash ISA savings rates were almost always lower than standard savings accounts.

Now it appears to me that they are broadly similar.

Does anyone else agree with this, and is this equivalence likely to continue now that rates are falling.

allegro120

RG2015 said:

I remember a few years back Cash ISA savings rates were almost always lower than standard savings accounts.

Now it appears to me that they are broadly similar.

Does anyone else agree with this, and is this equivalence likely to continue now that rates are falling.

That was the time I exited ISA scheme.  I started building ISA from the launch (£3k was the allowance to start with, as much as I can remember).  Some years passed ISA rates went far below the point of tax free incentive.  I didn't think at the time that keeping this money in ISA wrapper could bring benefits in a long run.  I've restarted ISA 5 years ago.

Earlier this year some ISA offers were at the same rates as taxable accounts, now they seem to be settled at right equivalence. I hope the equivalence will continue.   

maman

The obvious advantage of the cash ISA is that it's tax free, which makes it a good option if you're likely to pay tax on your savings. 

enthusiasticsaver

I moved away from Cash ISAs a few years ago but had a Stocks and Shares ISA but have not added to it over the last few years since early retirement.  We are using it as a drawdown vehicle to supplement pensions as all withdrawals are tax free. 

With the savings personal allowance and rates being lower on cash isas it seemed better to use regular savers but this year with me edging into being a tax payer again due to my final pension paying out and my state pension starts at the beginning of 2026 I have again started a cash ISA which I will continue to add to.  This is to keep savings interest under the personal allowance as I don't want to pay tax on interest as rates are already low. The tax free interest is the only reason I use it. As I am over 65 presumably I can continue to use it that way.  As you say the rates are roughly similar although I note some are now edging lower and are certainly lower than regular savers.  

My plan this year and next is to use regular savers then move them into my cash isa when they mature. I know that means the interest on the maturity is liable for tax though.