Our savings picks: This is Money’s five favourite best buy cash Isas – there are now NO easy-access deals paying 1%
Our assistant editor Lee Boyce picks his five favourite cash Isas for savers in 2020 – essential reading to help you choose a top savings account for your money.
This top Isa round-up has keeping our readers updated on the best savings deals since 2014 – and is kept up-to-date throughout the year – bookmark it for the very latest developments.
How an Isa works and why you should have one
Each year in April, savers are given a fresh Isa allowance that qualifies for tax-free interest.
For the 2020/21 financial year, starting 6 April 2020, the limit is £20,000.
Piggy five: We round-up the best tax-free deals – and it is slim pickings at the moment
You can transfer Isa money whichever way you wish between an investment account to savings account, whereas previously you could only shift it from saving to investments.
Although cash Isas don’t currently offer fantastic rates, it is still worthwhile opening one to shield money away from the taxman.
Isa rules state you can only contribute to one Isa per tax year.
You can also transfer an old Isa for better returns. Here’s a quick guide to Isa saving.
It is possible to switch your current year’s cash Isa if you move the entire amount, but it is far simpler to get your choice right in the first place.
Rates are low and that makes the best Isa more important
Banks and building societies should be apologising to savers for the slim pickings on offer here. The best buy easy-access rate on a tax-free account has plunged under 1 per cent for the first time.
Savings rates really are dire at the moment and unfortunately, institutions are doing little to shelter savers from the assault of the low interest rate environment.
The coronavirus crisis cut to 0.1 per cent for the base rate, launch of a new funding scheme to pump cheap money to banks, and expansion of quantitative easing, has made things even worse.
Many now ask themselves why bother?
Yet when rates are low it becomes even more important to make sure you are getting as much as you can from your savings.
We also think an Isa is still worth having, despite the new tax-free savings interest allowance of £1,000 a year for basic rate taxpayers and £500 for higher rate taxpayers.
It’s tough to get that much interest now, but one day rates will rise.
Money sheltered in an Isa will deliver a tax-free income, even above that £1,000 level and if you are building up a long-term pot, you may one day be very grateful for that.
And who knows if the personal savings allowance will be around forever – it is much more likely to disappear than the Isa wrapper.
You may also want to look into stocks and shares version of an Isa – how to choose the best (and cheapest) DIY investing Isa.
Our five favourite Isas:
– Facts: £1 to open
– Transfers in: No
– This is Money says: We’ve now unfortunately reached a point in which an easy-access account paying less than 1 per cent interest is considered the best buy. This top deal, also, doesn’t allow transfers in, which most other accounts do. It is offered by National Savings and Investments, and can only be opened and run online or by phone.
Charter Savings Bank, one-year fix, 0.76% [full details]
– Facts: £5,000 to open
– Transfers in: Yes
– This is Money says: This is the best rate you can get for 12 months – and it pays less than the easy-access deal from NS&I above. It is Financial Services Compensation Scheme protected and can be opened online or by post.
Charter Savings Bank, two-year fix, 0.85% [full details]
– Facts: £5,000 to open
– Transfers in: Yes
– This is Money says: Same as the above – Charter is offering a smidgen more interest for fixing for an extra 12 months. It still doesn’t beat the best easy-access Isa.
Cynergy Bank, easy-access, 0.9% [full details]
– Facts: £1 to open
– Transfers in: Yes
– This is Money says: This account from challenger bank Cynergy, which was previously known as Bank of Cyprus UK, matches the NS&I deal at the top – but crucially, it allows transfers in. It is FSCS protected.
Shawbrook Bank, five-year fix, 1.1% [full details]
– Facts: £1,000 to open
– Transfers in: Yes
– This is Money says: The only way to beat NS&I now is by fixing for a monster five years – all to get a tax-free rate of 1.1 per cent. It is offered by Shawbrook, which has FSCS protection.
THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS
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