If you’re paying tax on your savings interest due to rising interest rates, consider opening a cash ISA, which lets you earn tax-free interest on your savings. We list the best accounts right now including the top easy-access and fixed rates.

The top-paying easy-access cash ISA currently pays interest of 5.11%. If you’re willing to lock your money away, you can earn annual interest of up to 5.41%.

Today’s top rates beat the current annual inflation rate of 3.9%, meaning that your money can increase in value in real terms over time. Cash ISAs can also be a great place to put your money because it protects any interest that you make from tax.

In this article, we cover:

Read more: The best savings accounts

What is a cash ISA?

A cash ISA (individual savings account) is a tax-free “wrapper” for your money. That means you are sheltered from paying tax on any interest earned in one. Read our ISA guide for more information.

If you don’t use an ISA for your savings then you need to be careful not to breach the personal savings allowance.

There are broadly two types of cash ISA: easy-access and fixed.

• Easy access: you can withdraw money whenever you like and the rate is likely to change
• Fixed: pays a set level of interest over a certain period of time and your money is usually locked in for the duration of the deal

The government limits how much you can save into your ISA each tax year while still enjoying the tax-free benefits.

Read more: With interest rates forecast to fall, what should I do with my savings?

During the current financial year, you can save up to £20,000 a year across ISA products. You can spread the allowance across difference types of ISA such as cash or stocks and shares. At the moment, you can only invest in one ISA type each year but from April this rule will be removed.

You can transfer ISA allowances between providers and products.

If you are worried about exceeding your personal savings allowance or don’t have one, a cash ISA is a useful product to protect your savings income from tax. We explain how savings interest is taxed in our guide on the personal savings allowance.

How many cash ISAs can I have?

You can only open and pay into one cash ISA at a time, so it’s important to choose which account you want carefully.

If you want to transfer to a new cash ISA after already paying into one, you need to move all the money you’ve paid in that tax year to the new account when you open it. Something that’s not often possible with fixed accounts.

However, you are allowed to have multiple cash ISAs at the same time, as long as only one is being funded.

That means if you pay £10,000 into a fixed-rate ISA now, you can then pay £10,000 into a different fixed rate ISA next May. This is because the current tax year will have ended.

Can you have a cash ISA and a stocks and shares ISA?

Yes. While you can only open and pay money into one cash ISA at a time, you can also pay money into one of each other type of ISA. This includes stocks and shares ISAs and lifetime ISAs.

For example, you could pay £10,000 into a new cash ISA now, and simultaneously pay £10,000 into a new stocks and shares ISA. However, this assumes you’ve not paid money into any other ISAs this tax year. You are not allowed to pay more than £20,000 into all of your ISA products each tax year.

Read more: Are you really getting the best savings rates?

Best easy-access cash ISAs

The highest rate you can currently get on an easy-access cash ISA is 5.11%.

Some top-paying accounts have limits on how much or how frequently you can withdraw your money.

Always make sure you understand the restrictions on accounts before opening one.

Some accounts have limits on:

• How much can be paid in
• How much can be withdrawn
• The notice period is required to take money out
• And some require a higher initial contribution than others

Read more: Best savings accounts

In the table below, we round up the other top rates for easy-access cash ISAs.

Best fixed-rate cash ISAs

Fixed-rate cash ISAs usually pay a higher interest rate than the easy-access accounts because your money is tied up for a set length of time.

Watch out as you may have to pay a penalty to withdraw money early from a fixed account. Always read terms and conditions of products carefully.

Also bear in mind that if you aren’t looking for an ISA, a standard savings account might pay higher rates. We outline the top-paying non-ISA savings accounts.

Read more: Best savings accounts in 2023

Top one-year fixed rate ISAs

Happy to lock your money away for a year? Below we list the top one-year fixed-rate cash ISAs.

Top two-year fixed rate ISAs

Below are the top rates currently paid on two-year fixed-rate cash ISAs:

Top three-year fixed rate ISAs

Below are the top rates currently paid on three-year fixed-rate cash ISAs:

Top five-year fixed rate ISAs

Finally, the top rates currently for five-year fixed-rate cash ISAs:

Are cash ISAs worth it?

Since the introduction of the personal savings allowance in 2016, many people no longer pay tax on their interest when using standard savings accounts.

As a result, many haven’t seen the point in opening cash ISAs.

However, with the Bank of England raising the base rate of interest, savers are seeing a greater return on their money, which could push them over their personal savings allowance.

Not everyone gets a personal savings allowance either. Read more: What is the personal savings allowance?

We think an ISA can also be a very good idea if you:

• Have a fairly large chunk of money you want to keep in cash
• Are likely to breach the personal savings allowance (or don’t qualify for one)
• Act quickly to get the best deals, as they can go fast

We go into more detail about how cash ISAs work.

Once you have a pot of easy-access savings for emergencies, you might want to consider putting your money in a stocks and shares ISA.

In the table below you can also see how the average savings rates on standard accounts compare with ISAs and how they have changed.

	Sept 2021	Dec 2021	Aug 2022	Sept 2022	Feb 2023	Mar 2023	May 2023	Jul 2023	Aug 2023
Easy access	0.17%	0.20%	0.69%	0.85%	1.73%	1.85%	2.14%	2.42%	2.84%
Easy access ISA	0.25%	0.26%	0.76%	0.92%	1.85%	2.01%	2.31%	2.54%	2.88%

Best lifetime ISAs

If you are under 40, you can open a lifetime ISA, which gives you a 25% government bonus on your savings.

A lifetime ISA can be used to help you save for a deposit on your first home (worth up to £450,000), or for retirement saving. We explain how a lifetime ISA works.

There are two types of lifetime ISA: a cash version and a stocks and shares one.

Cash lifetime ISAs tend to have some of the best interest rates in the market.

Below are three cash lifetime ISAs currently paying the highest rates of interest.

Can you lose money in a cash ISA?

If the company you save or invest with goes bust, up to £85,000 of your cash is protected by the Financial Services Compensation Scheme (FSCS).

This only applies as long as your provider is authorised by the Financial Conduct Authority or the Prudential Regulation Authority.

Also bear in mind that inflation will eat away at your savings pot. While the value of your capital won’t fall (unless you spend your savings), the real spending power of your money is likely to decrease over time.

At the moment that is close: while the best cash ISAs pay interest of around 4% to 6%, inflation is at 3.9%.

The best way to stop inflation eroding the spending power of your cash is to invest your money in a stocks and shares ISA instead.

This increases the chances of you making a return that exceeds inflation, although remember that investing is never risk free and investment returns are not guaranteed.

Stocks and shares ISAs should only really be considered for long-term savings. To find out more, check out our beginners’ guide to investing.

So, if you’re interested in a stocks and shares Lifetime ISA, we round up the top providers.

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