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Savvy savers know cash Isa rates are nudging upwards with providers vying for our custom on easy-access accounts.
Recent rate raisers include Plum* at 5.01 per cent, Moneybox at 5 per cent and Chip* at 4.85 per cent while Trading 212* now sits at the top of the tree with an exclusive 5.05 per cent rate for This is Money readers which includes a 0.15 percentage point bonus.
It should be simple to get the best out of your cash Isa but it can prove tricky and time-consuming to navigate.
Since the introduction of Isas 26 years ago, there have been plenty of rule changes. There are so many differences in what providers offer that you must go further than looking at the rate to make sure it works for you and your lifestyle.
Is the account flexible? Can you take out money whenever you need to and how long does the top interest rate last? Providers are not all the same.
Some will let you take out money and replace it – as long as you do so in the same tax year – without affecting your £20,000 cash Isa allowance. Others do not despite government rules saying you can.
Your provider will tell you whether it is a flexible Isa or not but often you will find the answer hidden in the terms and conditions.
Flexibility is vital for those savers who use their full £20,000 cash Isa allowance each year. You can dip in and out of your savings during the year and earn tax-free interest.
You can, for example, put in £10,000 during this tax year and then take out £3,000.
If your Isa is flexible, your remaining allowance is £13,000. If it is not, it’s £10,000.
If you look to switch your flexible provider to another, make sure you replace any money you want to before you move. The key rule is that you must replace the money in the same Isa account from which you took it.
Some cash Isas let you take money out as often as you want while others restrict the number of times you can do so.
Isas can come with a bonus (which lasts only a year) so you will have to move your money when the time is up or put up with a poorer rate.
Last week, Plum* raised its rate to 5.01 per cent, including a bonus for the first year which boosts the rate from the basic 3.79 per cent.
It restricts you to three withdrawals a year. If you make more, your rate drops to 2.5 per cent.
Chip* pushed its rate up for new customers to 4.85 per cent, which includes a bonus payable for 12 months on top of its standard 4.58 per cent.
Trading 212* pays 5.05 per cent, a basic 4.9 per cent plus a 0.15 point bonus for new savers, with no withdrawal restrictions, available only via this special link.
Meanwhile Moneybox’s 5 per cent limits you to three withdrawals a year and includes a 0.55 percentage point bonus payable for a year.
Chip and Trading 212 are both flexible Isas. Moneybox and Plum are not.
Some products from the large providers are not flexible Isas, including NatWest Cash Isa, HSBC Loyalty Cash Isa, Co-op (now part of Coventry BS) Cash Isa, Santander Easy-Access Isa and Virgin Money (now part of Nationwide) Defined Access Isa.
Top rate online flexible Isas with no withdrawal restrictions include Monument Bank at 4.76 per cent but you need £10,000 to open an account.
Ford Money pays 4.35 per cent on £1 plus. On the high street, Newcastle BS Double Access Isa at 4.25 per cent restricts you to two withdrawals a year.
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