Best Cash ISA Rates for Last Minute Savers
Britons continue to favour cash over investing despite record low interest rates. Research by Selftrade, the online investment platform, has found that the most popular store of wealth is a current account, with 57% opting to let their savings build up in this way, according to the Missing Millions study.
Taxable savings accounts come in at a close second most popular product at 52%, and cash ISAs are the third most popular option with over a third of people using them for their savings. Many of these products pay little or no interest – failing to beat even the modest inflation rate of 1.8%.
Britons revealed that it was the accessibility of cash savings which appealed – particularly for those who had opted to drawdown a lump sum from their pension pot.
Comparatively, only one in ten chose to shelter their returns from the taxman in a stocks and shares ISA, while 12% hold stocks and shares outside a tax wrapper.
Nandini Ramakrishnan, global market strategist for JP Morgan Asset Management reminded savers that the ultra-low interest rates had depressed the return available on cash to near zero, leaving cash savings vulnerable to erosion by inflation over time.
“Cash left on the side earns very little over the long run. Investors who have parked their cash in the bank have missed out on the impressive performance that would have come with staying invested over the long term. Investors should be sure an allocation to cash does not undermine their long-term investment objectives,” said Ramakrishnan.
Best Cash ISAs
If you do choose to favour cash it is imperative you make it work as hard as any other part of your investment portfolio. The best standard saving account in the market now only offers the rate at 1.1% by RCI Bank’s freedom savings account, according to data compiled by Moneyfacts.co.uk and SavingsChampion.co.uk. The best cash ISA easy access account is Paragon Bank’s limited edition easy access cash ISA with 1.05% rate.
Savers who are willing to lock money up for a short period of time, could consider Atom Bank’s one year fixed rate saver paying a rate of 2%. This account requires a minimum of £50 to open it. There is no access within the term and interest is paid annually or monthly. For one-year fixed rate cash ISA options, Virgin Money’s one year fixed rate cash E-ISA Issue 223 and Bank of Cyprus UK both offer the best rate at 1.05%.
Fixing for longer provides a better rate of interest, with Atom Bank’s five-year fixed saver offers the best rate at 2.40% with a minimum deposit of £50, There is no access to cash within the five-year term and interest is paid annually or monthly.
For savers who are looking to the best cash ISA rate, Paragon Bank’s five-year fixed rate cash ISA tops the best buy table with a rate of 1.75% with a minimum deposit of £500. Withdrawals are allowed, subject to 365 day’s loss of interest.
Source: Morningstar. Karen Kwok | 07/03/2017
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