Savers have been given a massive boost after the rates available on cash ISA accounts climbed to their highest level for two years.
The latest research from Moneyfacts.co.uk found that the average cash ISA rate has risen to 2.27%, the highest rate since January 2009.
A number of banks and building societies have started to unveil their latest cash ISA products in anticipation of the new ISA season.
This is the period when savers rush to make use of their allowance for the present tax year and then make their contributions for the next.
Those wanting to use their 2010/11 allowance have until 5 April to make their contributions, which can be up to £10,200 in an ISA overall, with a maximum of £5,100 in a cash ISA.
The 2011/12 tax year begins on 6 April, at which point the contribution limits will rise to £10,680 overall, and £5,340 in a cash ISA.
To achieve the same return as the top paying cash ISA at present - Nationwide's e-ISA with a rate of 2.90% - Moneyfacts.co.uk says a basic rate taxpayer will need to find a standard variable account paying at least 3.63% and a higher rate taxpayer would need to achieve a return of 4.83%.
"At present, the highest variable no notice rate pays 2.90%, the same as the leading cash ISA but without the advantages of tax-free interest," said Louise Holmes, spokesperson for Moneyfacts.co.uk.
"Cash ISAs are a great option for investors".
"Aside from not having to pay income tax on their interest, savers can choose from a range of competitive easy access, notice and fixed rate deals".
"The maximum cash ISA allowance for the 2011/12 tax year will increase by £240 to £5,340, which should further increase the appeal of this popular method of saving."
Looking for a cash isa - Compare cash isa rates and best isa rates for transfers Request a FREE ISA Savings brochure now
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 Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.