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Cash ISA comparison

Learn all there is to know about cash ISAs with our handy guide

A cash ISA is a savings account where you don’t pay tax on the interest you earn. It’s that simple! Everything you can do with a normal savings account you can do with a cash ISA. The tax-free bit is the only real difference.

In normal savings accounts, you’d get taxed on whatever you earned in interest. A cash ISA let’s you keep 100% of the interest, which is why it has been a popular option among UK consumers for years.

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Put your money into a 2 year fixed rate account

Compare cash ISAs below

Updated June 19th, 2019
Name Product Account type Open with Interest rate Protection scheme
Fixed term
£1,000
2.25% AER
FSCS
Fixed term
£1,000
2.15% AER
FSCS
Fixed term
£1,000
2.10% AER
FSCS
Fixed term
£1,000
2.00% AER
FSCS
Fixed term
£1,000
1.85% AER
FSCS
Ford Money Fixed Cash ISA 2 Year
Ford Money Fixed Cash ISA 2 Year
Cash ISA
£500
1.75% AER Annual (fixed)
FSCS
Fixed term
£500
1.80% AER (fixed)
FSCS
Ford Money Fixed Cash ISA 1 Year
Ford Money Fixed Cash ISA 1 Year
Cash ISA
£500
1.55% AER Annual (fixed)
FSCS
Cash ISA
£1
1.41% AER (variable)
FSCS
Cash ISA
£1
1.05% AER (variable)
FSCS
Cash ISA
£1,000
0.85% AER (variable)
FSCS
Cash ISA
£1
0.30%-0.50% AER (variable)
FSCS
Cash ISA
£1
1.45% AER (variable)
FSCS
The AA Easy Saver
The AA Easy Saver
Fixed term
£100
1.43% AER
FSCS
Fixed term
£1000
2.60% AER
FSCS
Fixed term
£1,000
2.40% AER
FSCS
Fixed term
£1,000
2.36% AER
FSCS
Fixed term
£1,000
1.80% AER
FSCS
Fixed term
£1,000
2.10% AER
FSCS
YBS 1 Year Limited Access Saver
YBS 1 Year Limited Access Saver
£100
1.40% AER
FSCS

Compare up to 4 providers

Who can open an ISA?

Any person over 16 in the UK can put £20,000 into a cash ISA each tax year. Once your money is in a cash ISA, it stays tax-free year in year out.

In normal savings accounts, you’d get taxed on whatever you earned in interest. A cash ISA let’s you keep 100% of the interest, which is why it has been a popular option among UK consumers for years.

The decline of the cash ISA

Since the EU referendum, the rates of British people putting their money into cash ISAs has halved. The recent decline of the cash ISA isn’t just down to Brexit, however. While recent numbers of people putting their money into ISAs has dipped, it is still a very popular way of holding on to savings.

‘Personal savings allowance’

In April 2016, the ISA was made a bit redundant. Under new government rules, basic-rate taxpayers don’t have to pay any tax on the first £1,000 of interest earned in banks. This is known as the ‘personal savings allowance‘ (PSA), and it has encroached on what used to be the territory of the cash ISA.

Isas vs inflation

You’d be hard pressed to find any cash ISAs which can beat inflation. We’re living through a period which is difficult for savers hoping to protect their nest eggs.

How are inflation and interest rates linked?

Generally speaking, when interest rates are low people tend to save less and to spend and borrow more. Let’s clarify this with an example:

At the time of writing, inflation in the UK is at 2.5%. Put simply, this means a basket of shopping costing £100 this year will cost £102.50p in a year’s time.

Now imagine you’ve also got £100 in a cash ISA paying 1.13%. That £100 will be £101.13p next year.

Because interest rates are low, there’s less incentive to save. If you’re not saving you’re more likely to spend, and you’re more likely to borrow too because it will be cheap to do so.

In that case, why should I use an ISA?

Even though there are better rates available in different savings accounts and current accounts, ISAs still have their benefits.

  • ISA interest doesn’t count towards your PSA. You can make interest in your ISA and still get the £1,000 of tax free savings through your PSA.
  • ISAs give protection against future interest rate changes. If interest rates rise, people will have to pay more tax (in other savings accounts that aren’t tax-free). An ISA offers protection against this.
  • Protects savings if you move up a tax bracket. Having a cash ISA would ring fence your savings if you expect you might have to pay more tax in the not too distant future.
  • Interest rates won’t be low forever! When interest rates rise a bit more, the ISA should return as a more than viable option for those looking to grow their savings.
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