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Ditching high street banks could save you hundreds this tax year – how to find the best Cash ISA rates

As Cash ISA savers weigh up their options for this tax year, we look at easy ways to avoid losing out big on returns.
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Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The popularity of Cash ISAs have exploded in the last few years.

Interest rates are still relatively high, so heading into the first months of the new tax year, a lot of people will be considering their options.

A lot of savers tend to open Cash ISAs with the same bank as their current account. It’s convenient, you can usually keep your login details, and it’s a brand you trust. But the thing to remember is that high street banks know this.

These banks will often give savers a worse deal because they know they can get away with it. We’re taking a closer look at how much you could get from looking past the high street.

This article isn’t personal advice. If you’re not sure what’s right for your circumstances, seek advice.

Easy access Cash ISA savings rates

Right now, competitive easy access Cash ISA rates are offering more than 4.50%.

Putting your full £20,000 ISA allowance to work in a 4.50% rate could fetch you £900 interest after a year.

For the same amount getting 1.77%, the average easy access Cash ISA rate offered by a high street bank, you’d only come away with £354.

That’s a difference of over £500.

And not to mention, the big bank rates aren’t beating inflation. So, you’re actually losing money in real terms because inflation reduces the spending power of your money.

Of course, these figures are assuming rates stay the same, when in reality easy access rates are variable. Rates are predicted to start falling after Summer 2024, and big banks are likely to be the first to cut rates on their easy access products. This could mean the difference in returns between the high street and competitive rates gets even bigger for a time.

Fixed Cash ISA savings rates

When it comes to fixed rates, the leader tables are a bit more balanced, with most rates above 4%.

But beware of automatic rollover.

You usually can’t withdraw from a fixed rate until the term ends. When your fixed rate is coming to an end, the provider will contact you to ask what should happen to your money.

If you don’t make your wishes clear, as your money is likely to be rolled over into an easy access account. Some high street banks are currently paying less than 1.50%.

Making the right savings choice this tax year

As with a lot of savings decisions, the best thing to do is usually look beyond the high street. Challenger banks need to work hard for your money, so you’ll get a better rate most of the time.

New ISA rules this tax year also mean you can open multiple Cash ISAs at multiple providers, a mixture of easy access and fixed rate.

This is great for people who want their Cash ISA savings to meet their needs more accurately. But this can also leave them spending time opening new accounts, juggling logins, and doing the whole thing again when they want to switch.

That’s why with the HL Cash ISA, we bring you multiple challenger banks through one easy to use online account. You don’t have to open a new account when you switch between banks and you’ll find competitive easy access rates, and fixed rates up to three years. There’s no other Cash ISA like it in the UK.

Products can be added or withdrawn at any time, so check our website for the latest.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.

Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).

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Written by
Guy James
Guy James
Personal Finance Writer

Guy is a savings specialist, passionate about encouraging people to get to grips with their cash. An integral part of our Active Savings team, he aims to help as many people as possible secure their financial safety net, and make more of their cash.

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Article history
Published: 18th April 2024