Once banks have your ISA cash, they can slash interest rates in the safe knowledge many savers don't notice. Yet you've a right to transfer existing cash ISAs to another provider, and can boost rates by up to 30 times.
The trick is finding one that will let you. This guide shows where to put your cash for maximum gain.
In this guide
Best Buys:Cash ISAs
What is an ISA?
If you have savings, and aren't using an ISA (Individual Savings Account), then you're over-engorging the taxman's pocket. A Cash ISA is simply an untaxed savings account; get the top payer and it's a big interest boost.
You can deposit around £5,340 each tax year, from April to April (this limit will rise by RPI inflation each April) and you should be trying to earn as much interest as possible.
As Cash ISAs began back in 1999, it's now possible to have around £40,000 plus interest tucked away in them; yet the likelihood is that if you've not kept your eye on the rate, it's dropped lower than a limbo dancer. Luckily, you are free to switch your ISA money about, meaning it is possible to surf a wave of high, tax-free rates, as long as the account's rules allow transfers, and not all of them do.
For ten years now whether on telly, radio or in m'book I've used the same analogy to explain ISAs. So why stop now? Here come the cakes! For a more detailed explanation of ISAs, including what happened to the old mini and maxi rules (don't worry it still includes the cakes) see the ISA Guide.
Why transfer your ISA?
Cash ISA rates move and change, the best buys a few years ago may be paltry players now. By transferring you can ride the wave of high rates, while keeping your cash in the tax-free wrapper. It's also possible to fix the rate or up the risk you're taking to get much higher potential returns by using different types of cash ISAs; more on that later.
You can also transfer money from 'Tessa-Only ISAs' (or Toisas). If you had a Tessa, the tax-free forerunners of ISAs, it's possible some of your cash was swept into a Toisa once the Tessa matured. If your cash is still there now, the top picks here will accept that transferred in too. Find out more in the Toisa section
Any reason not to transfer?
You may be charged a penalty by your current provider for transferring out. This is becoming less common, but always check; a small penalty like 30 days' lost interest isn't 
such a big issue, but a higher fee effectively locks you in, as the gain from switching is gazumped by the transfer charge. If your ISA has a penalty for leaving, work out if you'll actually be better off by switching to the better interest rate.
How to transfer: The Golden Rule!
Transferring an ISA allowance is a technical process, not just like switching a normal savings account. Yet as long as you abide by the golden ISA transfers rule, it should go smoothly.
"Never, ever, ever, ever withdraw money from a cash ISA!
You'll immediately lose all the tax benefits."
Instead speak to the new provider and fill out a transfer form. This will usually include a note you can send to your existing ISA company. Your new company should then sort it all out, including moving the money over for you, keeping your tax benefits intact.
The banks have agreed to a 15 working day guideline for the transfer to take place, so you should begin to receive interest within 15 working days of the transfer. If it goes much over this time it's worth complaining to the ISA provider.
The rules
Like ISAs themselves, the transfer rules are unnecessarily complicated. The two key ones are:
- Not all transfer types are allowed. You can transfer a cash ISA into a shares ISA, but not the other way around.
- Only past years' ISAs can be split. Current year's cash ISAs must be moved whole, but previous years' allowances may be split between different providers.
These rules are explained in full in the comprehensive ISA Guide.
ISA Transfers FAQs
Cash ISA transfers is often an area of confusion, so to help clear up fact from fiction we've put together a quick Q&A.;
Can I transfer into an ISA without paying new money in?
Yes. Don't think of this as opening a new ISA, you're simply moving your old ISA into a new provider and can do this separately from opening a new account - providing you never put any money in it.
Imagine each ISA year's allowance is labelled 2008/9, 2007/8 etc. Once that year is finished you can't add any extra money to that year's ISA (except interest), yet any ISA that accepts transfers in will happily take everything labelled as an old tax year, and not count it as the current year's allowance.
How do I open an account just to do a transfer?
When going through the application process for an ISA that accepts transfers in of previous years' money, you'll be asked whether you want to move money in from old ISAs. Tell it you do, then provide the old account's details when asked.
Make sure you don't deposit any new money alongside it though unless you want to (it'll ask about this in the application too) as that'll mean you are paying money towards this year's ISA too. Do this and you won't be able to start a separate one up for new cash, for which better rates are often possible.
Can I transfer more than one old ISA into a new one?
Consolidating all your old ISAs into one is allowed, and often a good way of upping the rate on your whole wodge of ISA cash - this is because providers regularly slice rates on the money you saved in previous years.
To do this you just tell the new provider that you want to transfer in from multiple old ISAs. The main thing to watch here is that it doesn't push your combined savings with one financial institution over £85,000, as then you'd no longer be within the UK's savings safety limit (read Are your savings safe?).
Can I transfer old ISAs AND pay new money into one account?
Again, yes, provided the account accepts transfers. So, if a cash ISA had a minimum allowed balance of £10,000, this could be made up of £5,000 transferred from previous years' ISAs and £5,000 of new money for the current tax year.
This is often the set-up with the least hassle, especially if you have lots of money saved in ISAs from past years. However, rates on ISAs that only accept new money (ie. don't take transfers) often exceed those available on the ones that do, because the provider only has to pay the higher interest on a limited amount of cash.
So to maximise the savings rates you're earning, check the Top New Cash ISAs guide too.
How safe are your savings?
Bank collapse was once easy to dismiss, then the credit crunch and global market turmoil hit. The UK soon found itself bailing out Northern Rock, and the US authorities followed for even bigger bank Bear Stearns. This means these days every sensible saver should ask “is my money safe?.
The answer is quite simple. Provided your money is in a UK regulated bank or building society account, it's protected under the Financial Services Compensation Scheme (FSCS) and its golden rule counts for ISAs too...
The first £85,000 per person, per financial institution is guaranteed.
Sadly this is the simple face of savings safety; the exact rules are more complex involving how different banks are registered and what counts as a financial institution. For full info read the full Are My Savings Safe? guide.
How to maximise safety
Unless you've done very well in terms of earning interest, any cash ISA balance is unlikely to top this £85,000 limit, so there's likely to be no problem. Yet if you have further savings in other accounts with the same bank or building society, then in the unlikely event that it went bust only the first £85,000 is fully guaranteed, so for total peace of mind don't put more than this in any one institution; spread it around.
For those with very large amounts of savings (for example a house sale) this could lead to lots of accounts, even if you've too much to stick to the £85,000 limit for each one, the general rule of not having all your eggs in one basket still works. For more info see the how to get 100% safety section of the savings safety guide.
This guide and best buys
It's impossible to pick "which bank is in trouble?", we've seen great names of world banking like Goldman Sachs and Merrill Lynch in trouble. Therefore the only solution for this site is that we'll report the top rates regardless, alongside explaining any 'protection oddities'. So far, world governments have reacted to protect their banks and no savers have lost money, and its likely (though not certain) that will continue.
The UK's Top Rate Cash ISAs
Not all cash ISAs accept transfers in, especially the top paying ones; their high rates are intended to grab headlines and new customers, but cost the banks as little as possible. Yet at the moment, most of the top paying cash ISAs do allow transfers in, which is great news!
As Cash ISAs are generally 'variable rate', meaning they move both with the Bank of England base rate and for providers' own competitive reasons, always check every six months or so that your rate is still competitive. If not, transfer to a better payer. For alternatives to monitoring interest rates, read the Fixed Rate Accounts section.
Unless stated, all the accounts have full protection under the £85,000 per person, per institution rules. Though do check how institutions are linked and other notes in the safe savings guide.
The Top Rate Accounts
West Brom BS 3.07% AER Online. Min £1,000. Allows transfers in
- Rate: 3.07% AER includes 1.07% bonus until Feb 2013
- Min. Deposit: £1,000
- Interest paid: Annually (in April)
- Allows previous ISA transfers? Yes
- Transfer out penalties? No
- Safety: Shared £85,000 UK protection (see Safe Savings)
- Access: Online
The West Brom* WeBSave ISA 4 pays 3.07% AER, including a bonus of 1.07% that lasts until 28 Feb 2013 - so at that point transfer to a new bank. You need a minimum balance of £1,000, and it allows you to transfer in savings from previous years' ISAs.
This deal's only available via the link above - not direct - as it is a Moneysupermarket exclusive. It also scores impressively in the ethical savings stakes - see how it compares.
West Brom has full £85,000 UK protection, see the full Savings Safety guide. You can earn a tad more in Nationwide below, but you need to have £25,000 in savings to transfer in.
Nationwide customers, 3.1% AER Must have over £25k & be a Nationwide customer
- Rate: 3.1% variable AER (inc 2.1% bonus until 31 January 2013)
- Min deposit: £25,000
- Interest paid: Annually only
- Allows previous ISA transfers? Yes
- Transfer out penalties? No
- Access: Online
- Safety: £85,000 UK protection shared with Cheshire, Derbyshie & Dunfermline BS (see Safe Savings)
If you have over £25,000 to save, Nationwide's* online ISA pays 3.1% AER, including a 2.1% bonus until 31 Jan 2013. However you must be a Nationwide card account customer to apply. The initial deposit must be at least £1,000 and it accepts transfers in from previous years ISAs.
Nationwide shares its £85,000 UK protection with Cheshire, Derbyshire and Dunfermline building societies. Read more in the full Savings Safety guide.
Virgin, 2.85% AER Online. Min £1. Transfers allowed
- Rate: 2.85% AER
- Min. Deposit: £1
- Interest paid: Annually or monthly
- Allows previous ISA transfers? Yes
- Transfer out penalties? No
- Access: Online
- Safety: Shared £85,000 UK protection with Northern Rock (see Safe Savings)
The Easy Access Cash E-ISA from Virgin* pays 2.85% AER on balances over £1. It allows transfers of previous years' ISAs and interest is paid annually or monthly. The account can be opened and accessed online.
Although this is branded Virgin, the account is actually operated by Northern Rock - so the £85,000 protection is shared with any other Northern Rock accounts you have. Virgin bought the savings arm of Northern Rock in Jan 2012 (full details in the MSE News story). Read the Safe Savings guide for more info.
Principality BS, 2.8% AER Unlimited withdrawals allowed
- Rate: 2.8% variable AER (inc 1% bonus)
- Min deposit: £1
- Interest paid: Annually only
- Allows previous ISA transfers: Yes
- Transfer out penalties? No
- Access: Online
- Safety: Full £85,000 UK protection (see Safe Savings)
The e-ISA (issue 2) from Principality BS* pays 2.8% AER, including a 1% bonus for a year. The minimum deposit is £1 and it accepts transfers in from previous years ISAs. It allows unlimited withdrawals via a nominated account. You can open and operate the account online and interest is paid annually on 6 April.
Principality has the full £85,000 UK protection. Read more in the full Savings Safety guide.
Check your local Building Society.
On occasion a few small Building Societies may beat these with special deals for people in their locality or existing customers, so it's worth checking yours. All these rates are variable, meaning the providers can change the interest whenever they like. Therefore always monitor what yours pays and transfer again if it drops. For more options and alternatives, read the Top Cash ISAs article.
The Top Fixed Rate Accounts
If you're willing to lock your cash away there are some alternatives to monitoring interest rates, yet do remember...
Fixed rate ISAs give a guaranteed rate for a set period, but you can't take your money out during that time.
Therefore they're only suitable for those who are happy to lock cash away for the entire term and do mean you lose the flexibility to ditch and switch to a better payer if the rate is no longer competitive compared to others or something changes in its safety stakes.
While your money is supposedly locked away for 1 to 5 years, providers are forced to permit withdrawals, usually with an interest penalty of 60 to 180 days. However, they may not allow transfers to other ISA providers, meaning you'd have to lose the tax benefits to get at the cash.
Yet currently, that's balanced out because there are some decent rates available. This is because many lenders are desperate to get hold of your cash so they can lend it out at high rates during the credit crunch. Plus with fixed rates they get surety that you won't want it back until a defined time, thus allowing them to plan their lending strategies better.
The Best One Year Fixed Rates
If you want to lock away your cash, you can opt for a fix and get a better rate on a one year fixed ISA than the top easy access accounts above.
Metro Bank 3.25% AER From £1. Post or branch. Transfers allowed.
- Product & linkMetro Bank
- Rate: 3.25% AER
- Length of fixed deal: 1 year
- Min deposit: £1
- Access: Post or branch
- Allows transfers from previous years? Yes
- CLOSURE penalty: 180 days' interest
- Savings safety: Full £85,000 FSCS protection
The Fixed Rate Cash ISA from Metro Bank pays 3.25% AER for a year with a minimum deposit of £1. It accepts transfers in from previous years ISA's and pays interest annually on 5 April. You can apply by post or in one of it's nine branches, although these are centred around London.
Metro Bank has the full £85,000 FSCS protection, see the full Savings Safety guide for more info.
Aldermore 3.2% AER From £1,000. Online, phone or post. Transfers allowed.
- Product & link: Aldermore fixed rate cash ISA
- Rate: 3.2% AER
- Length of fixed deal: 1 year
- Min deposit: £1,000
- Access: Online, phone or post
- Allows transfers? Yes
- CLOSURE penalty: 120 days' interest
- Savings safety: Full £85,000 FSCS protection
The one-year fixed rate cash ISA from Aldermore pays 3.2% AER on balances over £1,000. Transfers in of previous years' ISAs are allowed. You can open the account online, by phone or by post. Interest is paid annually, or monthly at the slightly lower rate of 3.15% AER.
Aldermore has the full £85,000 UK protection, see the Safe Savings guide for more info.
The Best Two Year Fixed Rates
If you want to lock your cash away for longer, other length deals are available, yet in the current climate there's little guidance on where rates will be in a few years time. If you choose to lock your cash away for several years now, fixed rates could improve, meaning you'll be locked into a non-top pick account.
BM Savings 3.8% AER From £500. Post only, allows transfers
- Product & linkBM Savings Fixed Rate ISA
- Rate: 3.8% AER
- Length of fixed deal: 2 years
- Min. deposit: £500
- Access:Post
- Allows transfers from previous years?Yes
- Withdrawal penalty: 180 days' interest
- Savings safety: £85,000 FSCS protection, shared with HBOS group
The Fixed Rate ISA from BM Savings pays 3.8% AER for two years with a minimum deposit of £500. Transfers of previous years' ISAs are also allowed. The account can be opened online or by phone and then operated by post only. Interest can be paid annually or monthly.
Birmingham Midshires shares its £85,000 UK savings safety guarantee with the rest of the HBOS group. See the Safe Savings guide for more details.
The Best Three Year Fixed Rates
Currently, the top three year account matches the top two year account, so a better option might be to go for a slightly shorter term, or alternatively opt for a four year account.
Aldermore 3.8% AER From £1,000. Online, phone or post. Transfers allowed.
- Product & link Aldermore Fixed Rate Cash ISA
- Rate: 3.8% AER
- Length of fixed deal: 3 year
- Min deposit: £1,000
- Access: Online, phone or post
- Allows transfers? Yes
- CLOSURE penalty: 180 days' interest
- Savings safety: Full £85,000 FSCS protection
The one year Fixed Rate Cash ISA from Aldermore pays 3.8% AER on balances over £1,000. Transfers in of previous years' ISAs are allowed. You can open the account online, by phone or post. Interest is paid annually or monthly at the slightly lower rate of 3.74% AER.
Aldermore has the full £85,000 UK protection, see the Safe Savings guide for more info.
Halifax 3.7% AER
From £500. Online, phone & branches. Allows transfers
- Product & linkHalifax Fixed Rate ISA Saver
- Rate: 3.7% AER
- Length of fixed deal: 3 years
- Min deposit: £500
- AccessOnline, branch or phone
- Allows transfers from previous years?Yes
- CLOSURE penalty:270 days' interest
- Savings safety: Full £85,000 FSCS protection, shared across HBOS group
The fixed rate ISA Saver from Halifax pays 3.7% AER for four years. You can only make one deposit which needs to be at least £500 and can also transfer in money from previous years' ISAs. It can be operated by phone or in branches and can be viewed online. Interest can only be paid annually.
Halifax shares its £85,000 UK saving safety guarantee with the rest of the HBOS group, read more in the Savings Safety guide.
The Best Four Year Fixed Rates
If you're happy to lock your cash away for four years higher rates are available. There isn't much guidance on where rates are heading, so if you choose to lock your cash away for several years now, fixed rates could improve, meaning you'll be locked into a non-top pick account.
Halifax 4.3% AER
From £500. Online, phone & branches. Allows transfers
- Product & linkHalifax Fixed Rate ISA Saver
- Rate: 4.3% AER
- Length of fixed deal: 4 years
- Min deposit: £500
- AccessOnline, branch or phone
- Allows transfers from previous years?Yes
- CLOSURE penalty:320 days' interest
- Savings safety: Full £85,000 FSCS protection, shared across HBOS group
The fixed rate ISA Saver from Halifax pays 4.3% AER for four years. You can only make one deposit which needs to be at least £500 and can also transfer in money from previous years' ISAs. It can be operated by phone or in branches and can be viewed online. Interest can only be paid annually.
Halifax shares its £85,000 UK saving safety guarantee with the rest of the HBOS group, read more in the Savings Safety guide.
The Best Five Year Fixed Rates
If you are happy to lock away your cash for five years a higher rate is available. Yet here you are taking an even bigger gamble on rates staying low for a significant period; if UK interest rates recover between now and 2016, you could lose out as your cash is stuck at this rate.
Halifax 4.4% AER
From £500. Online, phone & branches. Allows transfers
- Product & linkHalifax Fixed Rate ISA Saver
- Rate: 4.4% AER
- Length of fixed deal: 5 years
- Min deposit: £500
- AccessOnline, branch or phone
- Allows transfers from previous years?Yes
- CLOSURE penalty:365 days' interest
- Savings safety: Full £85,000 FSCS protection, shared across HBOS group
The Fixed Rate ISA Saver from Halifax pays 4.4% AER for four years. You can only make one deposit which needs to be at least £500 and can also transfer in money from previous years' ISAs. It can be operated by phone or in branches and can be viewed online. Interest can only be paid annually.
Halifax shares its £85,000 UK saving safety guarantee with the rest of the HBOS group, read more in the Savings Safety guide.
BM Savings 4.25% AER
From £500. Post only, allows transfers
- Product & linkBM Savings Fixed Rate ISA Saver
- Rate: 4.25% AER
- Length of fixed deal: 5 years
- Min deposit:£500
- Access:Post
- Allows transfers from previous years?Yes
- Withdrawal penalty:Up to 365 days' interest
- Savings safety: £85,000 FSCS protection, shared with HBOS group
The fixed rate ISA Saver from BM Savings pays 4.25% AER for five years. You can only make deposits while ths issue of the account is open and you can also transfer in money from previous years' ISAs. The account can be opened online or by phone and then operated by post only. Interest can be paid annually or monthly.
Birmingham Midshires shares its £85,000 UK savings safety guarantee with the rest of the HBOS group. For more info see the Safe Savings guide.
Use the net to compare top rates
Fixed Rate deals can change regularly, for a full list of fixed rate ISAs use the MoneySupermarket* (select Cash ISAs and then Bonds) comparison or Moneyfacts. Though remember, they're just a simple list of top rates, so ensure you check for the possible pitfalls noted in this article.
Inflation-beating ISA savings
An alternative to fixing is get an account that gives you a rate guarantee for a certain period. However, the usually you have to lock cash away for up to five years, so only go for it if you are totally sure you won't need access. See full details of all the top accounts in the Inflation-Linked Savings guide.
Cash ISAs: Q&A; with Martin Lewis
Filmed on 14 March 2011
Want to up the risk?
If you want to up the risk, and potential reward/loss, on your cash ISA money, the rules were changed in April 08 to make this easier as it is now possible to transfer your cash ISA into a shares ISA (but not the other way around). Read the full ISA Guide.
What about Toisas?
The Tessa only ISA, tongue twistingly known as a Toisa, was another special tax-free product. Old style TESSAs, the forerunner of the cash ISA, lasted for five years and then matured. If this occurred any time between 1999 and 2004, the TESSA automatically turned into a Toisa.
Since April 2008, all Toisas have become simple Cash ISAs, meaning all normal ISA rules apply. You can no longer add any more funds to an old Toisa, but if you have any money left in one, you can transfer it and up the rate, to any of the accounts above.
The Size of the Saving
| Rate | Total Interest | Gain | |||
|---|---|---|---|---|---|
| 1 year | 2 year | 3 year | |||
| Halifax ISA Saver | 0.2% |
£80 |
£160 |
£235 |
- |
| First Direct Cash e-ISA |
2.75% |
£1,080 |
£2,190 |
£3,330 |
£3,095 |
| For ease of illustration calculations assume variable rates remain constant (or you transfer when rates drop) | |||||
If you have the full £39,300 (all 12 years worth) in Halifax's very poor 0.2% interest instant access cash ISA would earn just £310 interest over three years, compared to £3,330 with First Direct.
