Savers can lock in their money by taking out a cash ISA before rates go down; earlier this month the UK’s central bank reduced the base rate by 0.25% to 4.5%.
While this rate drop is good news for anyone paying down debts, such as a mortgage, it is not such great news for savers.
Chancellor Rachel Reeves is also believed to be reviewing the future of the cash ISA, either scrapping it or reducing the allowance from £20,000 to £4,000 a year.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said savers should take advantage of the cash version of tax-free Individual Savings Accounts (ISAs) benefits before they vanish.
The two main providers boosting rates to top the best buys include the money app Plum, which has just increased its ISA rate to 5.25%, and rival app Chip, which is paying out 5.03%.
Plum’s cash ISA does include a 1.51% bonus which is paid for the first 12 months, and a minimum balance of £100 is needed. required to access the bonus rate.
According to Money Saving Expert Chip, a money app that allows savers to invest, the rate on its cash ISA this week was raised to 5.03%. This includes a 0.71 bonus, but it lasts only six months.
Another option is Monument, which is at a lower 4.76%, but unlike the Plum and Cash versions, it does not have an introductory bonus.
The rates above are all variable, so you need to keep an eye on your savings.
You can also fix your ISA rate for a year but these will pay slightly lower rates of interest such as:
- OakNorth Bank – 4.46% for one year
- Secure Trust Bank – 4.41% for two years
Among the big names, the Post Office pays 4.4%, as does the Bank of Ireland. Both accounts need a minimum deposit of 4.4%, while Leeds Building Society pays 4.25%.
