Martin Lewis has named two top Cash ISAs (Image: ITVX)
Money expert Martin Lewis has named two top Cash ISAs which will beat the interest rates you can get by sticking with your bank.
March is the peak of Cash ISA season, where savvy savers look to maximise their annual tax allowances by filling up their £20,000 Cash ISA limit before the tax year changes in April and the limit resets (and this April it will still be £20,000, until next April, when it gets chopped to £12k).
For those who are at risk of going over their Personal Allowance, which is £1,000 of savings interest for a basic 20% taxpayer, £500 for a 40% taxpayer, a Cash ISA protects the interest from tax.
Speaking on The Martin Lewis Podcast on BBC Sounds and Spotify on March 19, Martin explained what to do to maximise a Cash ISA before the new tax year.
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He said: “The top new customer only rate at the moment is a company called Trading212 at 4.68%. This is a Cash ISA. 1% of that is a bonus only for newbies, so if you are not new to Trading212 you will not get that rate. Similar is with Plum at 4.66%. On the Trading212 Cash ISA, you can’t get that rate direct, that is a comparison site rate so you can get it on most comparison sites but if you go direct you won’t get that rate, just to complicate it. And you can’t do transfers.
“So if you’re looking for an ISA for new money or transfers or just transfers, there’s Moneybox at 4.26% is the top rate that includes transfers…there’s also Vida Savings, and all of these have little caveats like the amount of money you can withdraw a year.
“If you want no caveats, you can take money out unlimited, it’s Cynergy Bank at 4.05%.
“If you’re listening to this on the podcast, the rates are changing sometimes hourly so I cannot guarantee they’ll be there.”
Currently, people can newly save up to £20,000 annually in cash Isas, stocks and shares Isas, or a mix of both.
From April 2027, the annual adult cash Isa limit will be slashed to £12,000.
Only over-65s will retain the full £20,000 annual cash Isa allowance.
The annual overall contribution limit into adult Isas will remain at £20,000, potentially encouraging some savers who reach the £12,000 cash Isa limit to put more money in stocks and shares.
Alastair Douglas, chief executive of TotallyMoney, said: “Cash Isas let you earn interest on your savings tax-free – and that’s what can make them a better option than a regular savings account – and even more so if you have a decent amount of cash put away.”