Be wary of instant access cash ISA bonuses in the run-up to the end of the tax year – and mind the gap, Investec Save says

Investec Save is advising cash ISA savers to be wary in the run-up to the end of the tax year as new analysis shows four of the top 10 paying accounts rely on bonuses of as much as 1.76%.

Its analysis** shows that the average rate at the 10 highest-paying instant access cash ISA accounts is currently 4.18%. However, the top three paying accounts rely on bonuses that run out after a year and another of the top 10 also includes a 12-month bonus.

Bonuses paid range from 0.73% to 1.76% among the top 10 but can be as high as 3% a year from instant access cash ISA accounts in the top 50. Investec Save’s analysis shows 15 instant access cash ISAs pay bonuses with four of those in the top 10 and a further eight in the top 50. A further two are in the top 100 and one is ranked outside the top 100.

Investec Save analysed all 193 of the instant access cash ISAs available on the market and found the gap between the highest-paying account is just over 4% a year, with the highest paying 4.33% and the lowest-paying at 0.25%.

The average across all accounts is 2.66% with the average for the top 10% at 4.10% while the average for the bottom 10% is just 0.78%.

David Hunt, Head of Deposits, Investec, said: “Cash ISA savers need to be wary when choosing how to make the most of their tax-free saving allowance. Bonuses are increasingly being used to attract deposits in the cash ISA market as the clock ticks down on the £20,000 limit.

“It is a crucial part of shopping around in the cash ISA market to look out for bonus rates and to ensure that money is moved when the rate runs out. Even more importantly savers should ensure they are receiving a competitive rate as there are huge variations between the highest and lowest paying accounts.”

Investec Save’s range of accounts can be opened online in minutes and are fully managed online with no hidden fees or charges.

They include its 1-Year Fixed Rate Cash ISA paying 4.14% AER* which can be opened with a minimum of £1,000 enabling customers to earn tax-free interest on deposits fixed for one year. Customers can open multiple 1-Year Fixed Rate Cash ISAs within their UK ISA allowance. ISA transfers into Investec’s new Cash ISA from other providers will be available soon.

The 1-Year term of Investec Save’s Fixed Rate Saver offers 4.15% AER* while the 2-Year and 3-Year terms offer 4.16%*. The Fixed Rate Saver provides simplicity and security for savers. Interest is paid on maturity of the 1-Year term and annually on the 2-Year and 3-Year terms. No withdrawals are permitted until the end of the term in each case, and no further deposits can be made after the first seven days.

The 90-Day Notice Saver, which currently offers 4.00% AER*, permits unlimited deposits with withdrawals subject to 90-days’ notice.

The Online Flexi Saver, which currently offers 3.79% AER*, is a simple and secure instant access savings account. Unlimited deposits and withdrawals are allowed. This makes the Online Flexi Saver perfect for unexpected expenses that might arise, such as car maintenance or a vet bill.