TESCO Bank has increased the interest rate of its instant access cash Isa from 1.38 to 1.44 per cent, making it one of the best accounts for your money.
It’s not quite as good a rate as Virgin Money’s 1.45 per cent cash Isa, but with the Tesco product you can make unlimited withdrawals, whereas with Virgin Money you can only take money out twice a year.
An Isa lets you save cash tax-free, which means you can earn interest on savings of up to £20,000 a year without facing any Government deductions.
Tesco’s Isa comes with a fixed 0.79 per cent bonus for the first year that you hold the account, and afterwards it’ll drop to the standard variable interest rate that applies at the time.
It allows you to withdraw money as often as you’d like, but keep in mind it needs to be returned to the account before midnight on April 5 in the same tax year it was withdrawn, or the funds will lose its tax free status.
OakNorth’s Easy Access Cash Isa also offers a 1.44 per cent interest rate, but you’ll need to invest at least £1,000.
If you can lock away your cash for a set period of time, Shawbrook Bank offers interest rates of up to 2.13 per cent.
Rachel Springall, finance expert of comparison site Moneyfacts, told The Sun: “It’s great to see even more competition within the Isa market, particular on easy access cash Isas where many savers today may well prefer to invest their cash.
How do you switch Isa providers?
IF you're in the market for a new, better paying Isa, there's one thing you shouldn't do.
Never withdraw money from your Isa account to put it into your new one – if you do it’ll lose its tax free benefits.
Instead you need to follow the simple transfer process.
Make sure that the new account you want to use accepts transfers (not all do) and then fill in the Isa transfer form with the new provider.
It will arrange for your savings to be transferred over, with the process taking no more than 15 working days.
And remember, you can only have one “active” Cash Isa per tax year.
“Increasing the rate by 0.06 per cent has enabled Tesco Bank to not only maintain its best buy position, but the deal now sits towards the top of the market, just 0.01 per cent off the market-leader, Virgin Money.
“Due to economic uncertainties, savers may want to have some flexibility with their savings and unlike other deals in the best buys, such as Virgin Money’s Double-Take Isa, Tesco Bank allows unlimited withdrawals without penalty.
“The deal does carry a bonus of 0.79 per cent for 12 months, so savers will need to keep this in mind and be prepared to switch to maintain a competitive rate on their Isa down the line.”
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In April 2016, the Government introduced a big shake-up to something called the Personal Savings Allowance (PSA), which means basic rate taxpayers can now earn £1,000 in interest a year tax-free – in whatever account they’re saving in.
Are you looking for an Isa? We’ve put together a round up of accounts that offer the best saving rates.
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