Best cash Isas to transfer your savings and earn more interest

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Depositors at some of Britain’s big banks can more than quadruple the interest they earn by moving their Isa money to another provider.

Cash Isa’s rates have improved significantly since the beginning of last year. The average easily accessible deal now pays 2.01 percent, according to Moneyfacts. Just over a year ago, the average rate was just 0.26 percent.

But if you choose one of the best rates on the market – usually offered by small banks and building societies – you can get more than 3 percent interest. Savers can earn even more if they are willing to tie up their money for a fixed period of a year or more.

Those who hold their savings in an Isa with one of the UK’s major banks are likely to earn much less than this.

Lloyds, Barclays and NatWest all pay 0.65 percent on their standard easy access Isa deals. Meanwhile, Santander pays 0.6 percent.

What are the best easy access cash Isa deals?

Shawbrook Bank offers an easily accessible deal and pays 3.01 per cent, while Cynergy Bank, Coventry Building Society and Harpenden Building Society all pay 3 per cent. All four allow transfers.

Someone depositing £10,000 into one of those accounts will earn £300 in a year’s interest, provided the rate stays the same – compared to just £65 with a Lloyds, Barclays or NatWest cash Isa.

Cynergy and Shawbrook allow unlimited easy access, while Harpenden BS and Coventry BS limit depositors to three withdrawals per year.

Investment platform, Hargreaves Lansdown, is currently offering £100 cashback to customers who open their Limited Access Cash Isa account and pay 3 per cent interest.

It is available through Hargreaves Lansdown’s Active Savings Platform*. The money is held by Coventry Building Society.

The account allows up to six withdrawals per year at no cost, and depositors must deposit a minimum of £10,000 to qualify for the £100 bonus.

If the cash bonus is added to the interest payments, it means that someone who deposits £10,000 into this account would effectively get a rate of 4 per cent.

This means they would earn £400 in interest a year from now – if the rate stayed the same.

However, the offer is only eligible for those using their 2022/23 or 2023/24 allowance.

Cash Isa savers can pay up to £20,000 tax free each financial year.

Savers should be aware that some Isa providers have eligibility rules and some do not allow transfers from other providers.

For example, the very best Isa deals with easy access cash are currently offered by Swansea BS and Bath BS paying 3.25 per cent and 3.19 per cent respectively.

However, customers must live in Wales or Bath to take advantage of this. Swansea BS allows transfers but Bath BS does not.

> Check out the best, easily accessible Isa rates for cash

What about fixed rate Isas?

Savers willing to give up access to their money for a year or more should consider a fixed-rate deal.

According to Moneyfacts, the average one-year fixed cash Isa pays 3.56 percent. That’s 1.55 percentage points more than the typical easily accessible deal.

However, those who want to move their money from another fixed-rate account, whose fixed term has not yet expired, will likely be fined for transferring – so they will have to determine whether the new rate is worth the cost.

Unlike the relatively poor, easy Isa rate, Barclays has the highest paying one-year fixed rate Isa on the market – it pays 4 percent and also takes into account overdrafts.

It also allows customers to take three shots. They can withdraw up to 10 percent of the current balance on any of these occasions without penalty.

The next best deal is with Virgin Money, which pays 3.95 per cent, followed by Coventry Building Society at 3.90 per cent.

Those willing to commit to two years should consider Virgin Money, which currently pays a market-leading 4.11 percent.

It allows transfers, can be opened with as little as £1 and must be managed online.

Any withdrawal within the fixed interest period is subject to a fee equal to 90 days of loss of interest on the amount withdrawn.

A person who puts £10,000 into Virgin’s account earns £839 over the course of two years.

> Check out the best flat rate cash isa deals