7 cracking cash ISAs for early birds

Category: Savings
Date: 5/11/2012

When the new tax year began on 6 April you got a new cash ISA allowance of £5,640 for 2012-13.

Using your ISA allowance sooner rather than later has notable advantages:

• You benefit from tax-free interest earlier (than if you waited until the end of the tax year in April 2013)
• Cash ISA rates are still competitive as providers have left some good deals on offer to tempt early bird investors

Best easy access cash ISA (with bonus)

Penny says…
"Easy access cash ISAs remain super competitive after the start of the new tax year, with 3.50% being only 0.10% less than the top 1 year fixed rate ISA.

This ISA from Cheshire BS does not allow transfers from existing ISAs you have – so you can only save this year's allowance of £5,640.

If you have an ISA pot to transfer, the Santander Direct ISA Issue 9 is the best available at 3.30%."

Best notice period cash ISA

Penny says…
"Traditionally-speaking, a notice period cash ISA should pay a higher rate of interest than its easy access counterpart. However, that's currently not the case.

Coventry BS's 60 Day Notice cash ISA pays 0.25% less than the top easy access ISAs from Cheshire BS and the AA.

If you want to transfer cash ISA you already have, you'll have to drop a further 0.10% to Aldermore's 60 Day Notice Cash ISA at 3.15%."

Best 1 year fixed rate cash ISA

Penny says
"If you're 50 or over, SAGA is offering a 1 year fixed rate ISA that is 0.10% higher than the nearest competition (from Santander).

However, you can't transfer your previous ISAs to SAGA – this deal is only for this year's ISA allowance. If you're under 50, or you have an ISA you wish to transfer, the best rate on offer is Santander at 3.50% AER (for amounts of £2,500 or more)."

Best 2 year fixed rate cash ISA

Penny says
"Apart from one year fixed ISAs, where the competition is close, the 2, 3, 4 and 5 year fixed rates have a runaway leader.

Santander is 0.30% ahead of Halifax in the 2 year fixed ISA category. This gap would increase still further if Rory McIlroy wins an eligible golfing major as Santander will pay an additional one-off 0.10% when the ISA matures."

Best 3 year fixed rate cash ISA

Penny says
"Halifax has cemented its position as the highest paying provider over 3, 4 and 5 years by increasing its rate on its 3 and 4 year fixed rate ISAs.

The 3 year fixed rate is now 0.35% ahead of Cheltenham & Gloucester's offering at 3.90%. At just 0.10% less than the best 4 year fixed (again from Halifax), this ISA is clearly head and shoulders above the competition."

Best 4 year fixed rate cash ISA

Penny says
"Benefitting from a rate increase, the 4 year ISA Saver Fixed is now 0.45% clear of the competition.

Interestingly, Halifax's greatest competition may be itself – with its 3 year ISA only paying 0.10% less! However, if you want to specifically save your ISA money away for 4 years, 4.35% is the best rate you can get by some margin."

Best 5 year fixed rate cash ISA

Penny says
"Halifax's 4.50% ISA Saver Fixed is a full quarter of a percent over the next best on offer, as Halifax asserts its rate dominance in the longer term ISA category.

Two disadvantages with Halifax's ISA Saver Fixed are that:

1. There is no monthly interest option if you take an income from your savings interest (the best on offer in this case is the BM Savings 5 Year Fixed Rate ISA at 4.25%).
2. The penalties for early access are quite harsh in comparison to other 5 year ISAs. If you feel that there's even a remote chance that you'd need to access your money in 5 years, you'd be best to look at the early access interest penalties charged by other providers before making your decision."

What next?

Compare variable rate cash ISAs
Compare 1 year fixed rate cash ISAs
Compare the best cash ISAs for transfers

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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 anytime.