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Top 6 inflation-beating cash ISAs

Top 6 inflation-beating cash ISAs

Category: ISAs

Updated: 15/11/2016
First Published: 15/11/2016

Inflation took an unexpected dip in October, official figures have revealed, with the measure of CPI standing at 0.9% (down from 1% in September). Unfortunately, this hasn't had a measurable impact on returns: less than half of all savings accounts pay a rate that will match or beat it, which means it's vital to make sure you're getting the best deal possible.

Inflation has been on a general upwards trajectory over the last few months - even this latest dip is only marginal, and certainly won't bring much benefit to savers. This, combined with record low savings rates, means it's becoming more difficult to find an account that will give a measurable return, so don't leave it to chance!

ISAs continue to offer one of the best ways to secure inflation-beating returns, despite the Personal Savings Allowance (PSA) being in force, which allows up to £1,000 in interest to be earned tax-free each year regardless of where your savings are held.

However, it's definitely still worth investing in an ISA: your pot will remain tax-efficient no matter what happens to savings rates or PSA rules in future, and if you build up a healthy pot and earn more than £1,000 in interest, it becomes even more beneficial.

So, with that in mind, we've compiled a list of the top six inflation-beating fixed rate cash ISAs currently available. We've focused on longer-term accounts of at least three years as these are the ones that will offer the best returns on your money - you'll have to lock your cash away, but the returns could be worth it!

Top 6 inflation-beating cash ISAs:


AER
Details

Metro Bank
5 Year Fixed Rate Cash ISA Issue 4
1.50% AER
  • Rate fixed for five years
  • Minimum investment of £1
  • Transfers in of previous years' ISA savings permitted within 30 days of account opening
  • No further additions or withdrawals
  • Earlier access on closure and 180 days' loss of interest
  • Transfers out on 180-day loss
  • Account must be opened in branch by new customers, although existing members can also open an account online, by phone or in branch. Account then becomes branch and phone-operated
  • Interest paid yearly and must be compounded
  • Access via nominated account

Taking the top spot is this five-year deal from Metro Bank, paying 1.50% yearly from a minimum investment of just £1. Transfers in are accepted for a limited period, but further additions and withdrawals are not. However, earlier access to funds is possible, subject to closure of the account and 180 days' loss of interest, which is actually a fairly low penalty when compared with others in this sector.


AER
Details

Shawbrook Bank
5 Year Fixed Rate Cash ISA Bond Issue 5
1.45% AER
  • Rate fixed for five years
  • Minimum investment of £5,000
  • Transfers in of previous years' ISA savings permitted on account opening
  • Further additions permitted while issue remains open
  • Withdrawals and transfers out subject to 360 days' loss of interest
  • Internet-operated
  • Interest paid on anniversary

In second place is this deal from Shawbrook Bank, a five-year ISA that pays 1.45% yearly from a minimum investment of £5,000. Transfers in are accepted, as are further additions for a limited period. Withdrawals are also permitted subject to a loss of interest penalty, and as a particular bonus, it doesn't ask you to close the account should you need to access your cash early. The same penalty applies to those wishing to transfer away from this internet-operated account.


AER
Details


Hodge Bank
5 Year Fixed ISA

1.40% AER
  • Rate fixed for five years
  • Minimum investment of £5,000
  • Transfers in permitted (min. £5,000)
  • No further additions or withdrawals
  • Earlier access on closure and a penalty fee
  • Transfers out subject to a penalty
  • Account can be opened and operated in branch, by phone or by post
  • Interest paid yearly and must be compounded

Securing a top-three spot is this five-year deal from Hodge Bank that pays 1.40% yearly to those with a minimum of £5,000 to invest. Transfers in are accepted, subject to a minimum amount, but further additions and withdrawals are not. However, earlier access to funds is possible, albeit subject to closure of the account and a penalty fee.


AER
Details

Hodge Bank
4 Year Fixed ISA
1.30% AER
  • Rate fixed for four years
  • Minimum investment of £5,000
  • Transfers in permitted (min. £5,000)
  • No further additions or withdrawals
  • Earlier access on closure and a penalty fee
  • Transfers out subject to a penalty
  • Account can be opened and operated in branch, by phone or by post
  • Interest paid yearly and must be compounded

Hodge Bank has done it again with a second account securing a place in the charts, this time its four-year bond which, fittingly, takes fourth spot. It pays a rate of 1.30% yearly and only asks you to lock away your cash for four years, with all other features mirroring that of its five-year counterpart.


AER
Details

Paragon Bank
3 Year Fixed Rate Cash ISA
1.25% AER
  • Rate fixed for three years
  • £500 minimum investment
  • Transfers in of previous ISAs permitted
  • Further additions allowed for 15 days from account opening
  • Earlier access and transfers out subject to 270 days' loss of interest
  • Internet operated
  • Interest paid on anniversary

Paragon Bank nabs a place in the top five with this deal paying 1.25%, and better yet, it only asks you to lock your money away for three years. Transfers in are allowed, as are further additions for a limited period. Withdrawals are also possible, although it should be noted that this earlier access will result in the loss of 270 days' interest, the same penalty as applies to transfers away from this internet-operated account.


AER
Details

Skipton BS
5 Year Fixed Rate ISA
1.25% AER
  • Five-year bond
  • Minimum investment of £500
  • Transfers in and further additions permitted while issue remains open
  • No withdrawals
  • Earlier access on closure and 365 days' loss of interest
  • Transfers out on 365 days' loss
  • Account can be managed in branch, by post and online
  • Interest paid on anniversary

Just squeezing into the top six is this deal from Skipton BS, a five-year bond that pays 1.25% AER from a minimum investment of £500. It permits both transfers in and further additions, together with earlier access, although this is subject to closure of the account and a 365-day interest penalty.

Information & rates correct as at: 15.11.2016

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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