Savings: Our top 5 Cash ISAs to help you beat inflation


Our top 5 Cash ISAs to help you beat inflationWith the rate of inflation rising a last month and interest rates showing no signs of increasing any time soon, we thought we’d take a look for the top Cash ISAs (Individual Savings Accounts), to give you a real return.

First things first though, what rate of interest do you need from a Cash ISA to beat inflation?

Because the returns from a Cash ISA are tax-free, the answer is simple: exactly the rate of inflation, currently 1.3%. But remember, the rate of inflation changes each month; if it rises and you are stuck with a fixed rate Cash ISA paying less, you could see the real value of your savings start to be eroded.

So it’s not just a case of beating the current rate of inflation, you also need to look for a ‘buffer’ in case the rate of inflation rises in the months ahead.

Click on the account name or logo for more information

BM SavingsEasy access with instant access: Birmingham Midshires ISA Extra Issue 11

There are instant access Cash ISAs with better interest rates, but they all have restrictions, which make them hard to open. For example the Punjab National Bank pays 2%, but the account is only available to open in a branch.

The BM Savings ISA Extra Issue 11, is available to open online and the minimum opening balance is just £1.

The interest rate is 1.55%, which includes a bonus of 1.05% for the first 12 months; so remember to shop around when the rate falls.

The Melton Mowbray Building SocietyNotice Cash ISA with inflation beating rate: Melton Mowbray 100 Day Notice Cash ISA

If you know when you will need access to your savings and can tie them up for around three months, you could consider the Melton Mowbray 100 Day Notice Cash ISA.

The account pays a rate of 2.10%, well above the rate of inflation and can be opened in a branch or by post, with a minimum deposit of just £25.

The account has the added advantage that if inflation starts to creep up, or interest rates rise, you can access your savings by giving the required 100 days’ notice.

Julian Hodge BankOne year fixed rate Cash ISA: Julian Hodge One Year Fixed Rate Cash ISA

If you’re worried about interest rates falling further, you might decide to fix your interest rate for a year. If so the Julian Hodge One Year Fixed Rate Cash ISA is currently paying 1.75% and can be opened in a branch or by post.

The account though has a minimum opening balance of £5,000, although it accepts transfers in from existing Cash ISAs, this might be too high for some savings.

If you need a lower opening balance, the Post Office has a One Year Fixed Rate Cash ISA, Issue 2, paying 1.70%, which can be opened with just £500; again it will accept a transfer in from existing Cash ISAs.

Barclays 150pxTwo year fixed rate Cash ISA: Barclays Bank Two Year Flexible Cash ISA, Issue 4

If you want to tie up your savings for even longer, the Barclays Bank Two Year Flexible Cash ISA, Issue 4 is currently paying 2.05%.

The account is available over the internet, by phone or in a branch, and requires just £1 to open; it will also accept transfers in from other Cash ISAs.

The account has a unique feature as it allows three penalty free withdrawals, of up to 10% of the balance, during the two year term.

However, whilst this is account is towards the top of the two year fixed rate Cash ISAs, we have to question why savers would tie up their money for so long, when the 100 day notice account from the Melton Mowbray currently pays more and arguably gives you more flexibility.

NationwideDon’t forget the kids: Nationwide Smart Junior ISA

If your children have savings, they might as well hold them in a Cash ISA. It’s unlikely they are taxpayers at the moment, but when they hit 18 the account will be converted into an ‘adult’ ISA, giving tax free interest when they do start to pay tax.

The Nationwide Smart Junior ISA currently pays 3.25% and can be opened online with just £1.

As an alternative if you already hold a Halifax Cash ISA, your child can open a Halifax Junior Cash ISA and get a rate of 4%.

Shop around for the best rates

Whenever we talk about interest rates and savings accounts we always urge you to shop around for the best rates.

Even though the rate of inflation is relatively low, now is not the time to be lazy with your savings. The rate of inflation could rise further and interest rates could fall even lower.

We’re here to help.

If you would like advice on your savings call one of advisers on 0115 933 8433, alternatively complete our online enquiry form by clicking here.

Note: The Financial Conduct Authority (FCA) does not regulate Cash ISAs.