Top three cash ISAs with high interest as April deadline looms

Amid continued economic uncertainty, savers have been searching for the most lucrative places to put their hard-earned cash. Those looking to capitalise on this year’s ISA personal allowance before the start of the new financial year on April 6 may be considering a stocks and shares ISA. However, a finance expert warns investors must be “comfortable” with risk as market volatility has seen funds take a hit.

According to Moneyfacts research, the average stocks and shares ISA fund experienced a loss of 3.27 percent between February 2022 and February 2023, which is much more subdued than the 6.92 percent growth seen between February 2021 and February 2022.

In contrast, the Moneyfacts average cash ISA rate returned 1.71 percent between February 2022 and February 2023. This compares to 0.51 percent between February 2021 and February 2022.

Commenting on the ISA market, Rachel Springall, finance expert at Moneyfacts, said: “Stocks and shares ISAs suffered an overall loss over the past 12 months, with most primary fund sectors returning a loss.

“This should not be much of a shock considering the significant volatility felt across the markets over the past year, but it does emphasise the importance of keeping track of investments and ongoing fund performance.”

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According to Ms Springall, cash ISAs have rebounded in comparison, thanks to competition and consecutive Bank of England Base Rate rises.

Ms Springall continued: “Cash ISAs are traditionally a more popular choice among consumers, but some investors may well be reconsidering their attitude to risk in hopes of growing their pot over the longer term.

“Indeed, HMRC data showed a rise in the number subscribed to stocks and shares ISAs between 2020 and 2021, but cash ISAs held the majority share. Over more recent years, there have even been ISAs created to encourage consumers to save for a home or retirement, such as with a Lifetime ISA.”

The right ISA for any saver will come down to their individual needs, however, Ms Springall noted: “Those considering stocks and shares must keep in mind that past performance is never guaranteed to be reflected in future returns, so it’s vital investors are comfortable with their level of risk.”

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Gatehouse Bank operates under Sharia principles, which means profit is earned instead of interest. And with a Woodland Saver, a new tree planted in UK woodland per bank account opened or renewed.

This account requires a minimum deposit of £1,000 to open and interest is paid on the anniversary. Withdrawals are also permitted for each account, however, a penalty charge will be added depending on the account. The Three Year Cash ISA will be subject to a reduction in profit of 270 days.

Close Brother Savings’ Two Year Fixed Rate Cash ISA is offering an AER of 4.05 percent.

Savers can open this account with a minimum deposit of £10,000 and interest is calculated daily and paid annually and at maturity. Early transfers or closures will be subject to a penalty charge.