Is YOUR Isa incomes lower than 2%? These best-buy accounts can turbocharge your returns

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As a low-risk, tax-free option to hold your savings, it’s understandable why cash Isas are so popular.

Approximately, 40 per cent of the £726billion held in Isas is in cash rather than stocks and shares.

However, millions of savers earn far less than they should by keeping cash in sub-par accounts when they could be earning more than double elsewhere.

Figures from Paragon Bank show that £54billion of cash Isa savings are held in accounts paying out 2 per cent interest or less.

It means that with CPI inflation at 3 per cent, savers are facing a real-term loss by parking their cash in low-rate accounts.

> Find the best easy-access cash Isa rates using our savings tables 

Of the 7.2million instant access adult cash Isa accounts earning meagre returns, the average balance stands at £7,252. 

Some 1.6million accounts have a balance of more than £10,000, and 18,305 accounts containing between £85,000 and £100,000.

An Isa saver with an average balance of just over £7,500 could be missing out on over £100 in added interest by parking their cash in an account with a non-competitive rate.

A saver with a balance of £7,252 earning 1.5 per cent would earn £108.78 in interest over a year, but if this was transferred to an account earning 4 per cent, it would be £290.08.

Derek Sprawling, managing director of savings at Paragon, said: ‘On the plus side, it’s positive that savers are protecting their money from tax by keeping it within an Isa wrapper,. 

‘But on the downside, there’s billions of pounds that could be working harder by being moved to higher paying accounts.’

Fixed-rate Isa accounts

One way to boost your returns is opting for a fixed-rate cash Isa, which lock your money away for between one and five years. 

Paragon’s figures reveal that just £1.7 billion is held in fixed-rate Isa accounts earning 2 per cent or lower, suggesting savers are getting a better deal. 

Shawbrook Bank offers the highest paying one-year fixed cash Isa at 4.48 per cent, followed by Oaknorth Bank, where you can earn 4.47 per cent. 

Castle Trust Bank, Charter Savings Bank, Close Brothers Savings and Hodge Bank all offer 4.4 per cent.

You can also earn 4.41 per cent with Close Brothers Savings over two years, and 4.43 per cent over three years.

One of the benefits of a fixed-rate account is that it locks in the rate for a fixed period of time. Instant access account rates can offer enticing introductory offers but the variable rate will often change with the Bank of England’s base rate, which is set to fall further.

However, fixed-rate accounts won’t work for everyone, especially if you need to easily access the money for emergencies. 

> Find the best fixed-rate cash Isa deals  

Challenger platforms offer generous bonuses

There has been a battle in the cash Isa tables, with platforms offering generous bonus rates almost daily.

The top easy-access cash Isas in This Is Money’s independent best-buy tables are all offered by new, challenger platforms to entice new customers. 

They usually come with a generous bonus which last between 3 and 12 months before dropping to a lower variable rate.

Moneybox* is currently offering a market-leading 5.25 per cent on its easy access cash Isa for new customers, which includes a 0.62 per cent bonus for 12 months.

Trading 212* is also offering a 0.75 per cent bonus for This Is Money readers for three months if they use the code TIM, meaning they’ll earn 5.25 per cent on their savings, before the rate drops back to 4.5 per cent. 

The account can only be opened by downloading Trading 212’s app. 

There are no limits to how many times you can withdraw your money and Trading 212 will not reduce your interest rate for accessing your money.

It is followed by Chip*, offering 5.03 per cent which includes a 0.71 per cent bonus for three months if you use the code 3MONTHSISA. The rate will drop back down to 4.32 per cent after three months.

Plum* also recently hiked its cash Isa rate to 5.02 per cent, which includes a 1.27 per cent bonus for 12 months. If your balance drops below £100 or you withdraw more than four times, your rate will drop to 2.5 per cent.

This is Money’s five of the best cash Isas round-up puts CMC Invest* in top spot – which offers 4.85 per cent – as the account is flexible, has unlimited withdrawals and doesn’t have a time limited bonus, while also having a top rate.

All providers’ cash Isas are protected under the Financial Services Compensation Scheme limit of £85,000.