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The Independent
4 days ago
- Business
- The Independent
Best savings accounts and cash Isas for your money after interest rate changes
With interest rates heading slowly downward across 2025, it remains vital to ensure your money is working hard for you. Making sure your savings account has a high rate of interest is important for two reasons: one, it earns you more cash across the year, and two, it gives you a better chance of preserving the real value of your money - which is eroded through inflation. Given inflation remains higher than the government's 2 per cent target - it rose to 3.5 percent in April - you should take the time to scan for the best available rates and put your money somewhere above this. The Bank of England's base rate is currently 4.25 per cent. There are plenty of such accounts right now so make the most of them and grow your savings, whether in a cash Isa, an easy-access account or a fixed-term deal. Best cash Isa accounts A cash Isa is just like any other savings account, but you don't pay any tax on interest earned, there's currently a £20,000 personal allowance to deposit funds in each year and some companies may have different restrictions or points to be aware of, such as bonus interest rates which last for only a few months. The top rate in this area right now is with Moneybox, who are offering 5.46 per cent on your money - but that includes a 1.51 per cent bonus which lasts for three months. The minimum balance is £500 and you can have three withdrawals a year without impacting the rate you get. After that, a host of places are offering a little under the 5 per cent mark. Plum are offering 4.85 per cent for new customers which includes a bonus rate if you keep your account for a year, while Chip 's 4.82 per cent Isa drops to 4.06 per cent (variable) after 12 months. The best non-bonus rate is from Tembo, who offer 4.8 per cent with unlimited withdrawals. Always check rules around withdrawals before opening any Isa product to ensure it suits your needs and remember putting money into a cash Isa counts towards your overall Isa allowance, which could include stocks and shares investing accounts, Lifetime Isas or other products. Best easy access savings accounts If for any reason you don't want or cannot use an Isa, an easy access account should be your next port of call if you need to be able to call upon your money at short notice. Right now, plenty of banks and building societies are offering rates above 4.5 per cent - but again, check the terms of each account suit your expected needs. For example, Atom Bank are offering the highest rate of 4.75 per cent, though if you make a withdrawal from the account in any given month, you'll instead get 2.5 per cent. This is to encourage regular saving, ideal for those who need to build a safety pot or have a specific goal in mind. Beyond that, rates are comparable between Snoop (4.6 per cent), Chip (4.56 per cent), Cahoot (4.55 per cent) and Coventry Building Society (4.5 per cent). Most have minimum deposits to open and run the account, but this can be from £1 in some instances. It's also worth noting that many banks have savings accounts accessible only if you are already a current account customer - and these can be rewarding with higher interest rates of up to 7 per cent. However, you can often only save a fixed amount per month, such as £300. Fixed term accounts If you have money you'd like to lock away for a longer period, perhaps to avoid accessing it to spend or because you know you'll need it on a particular date down the line, a fixed-term bond might be ideal. The drawback, aside from no access to the cash, is that if interest rates go higher, you'll be earning the same rate you accept - and with not much difference between fixed deals and easy access right now, you might therefore miss out. On the other hand, if rates continue to drop, you'll be guaranteed the fixed rate for your entire term. Looking at 12-month bonds, Hampshire Trust Bank is leading the pack by a slight amount with their 4.45 per cent offer; interest in this type of account tends to be paid at the end of the term, with no withdrawals allowed and both minimum and maximum amounts allowed - in this case, from £1 to £250,000. There are a shed-load of banks and building societies offering between 4.3 and 4.4 per cent, with slightly different rates depending on your deposit amount, the brand name you prefer and other terms within each account. Some include: Rates are always subject to change but are correct at publish date. Always ensure the account is right for your needs - and most of all, make sure your money is working for you!
Yahoo
20-05-2025
- Business
- Yahoo
Pros and cons of lifetime ISAs
Lifetimes ISAs, or LISAs as they're more commonly known, were introduced in 2017 to give UK residents between the ages of 18 and 39 the chance to save for their first home or retirement. According to HMRC, more than 1 million LISA accounts had been opened by 2023, with the total amount saved about £6.5bn. While COVID and the post-pandemic housing boom fuelled their use, more recently, there's been a decline in take-up, with higher interest rates and the cost-of-living crisis making home ownership difficult and saving for the long term even harder. 'According to data from HMRC, LISAs only accounted for 4% of total ISA subscriptions between 2022 and 2023,' says Amelia Murray, money expert at Be Clever With Your Cash. As a consequence, the government is currently debating their validity and looking into potential improvements. Read more: Martin Lewis issues lifetime ISA warning to MPs Brian Byrnes, head of personal finance at Moneybox, explains: 'The Treasury select committee launched a call for evidence on the lifetime ISA, looking to understand if the product's original design continues to meet the needs of young savers now and into the future. 'Despite being introduced in 2017, the LISA's core rules have remained unchanged, prompting the committee to examine whether it continues to effectively support first-time buyers and long-term savers.' With this in mind, we spoke to four financial experts to see whether investing in a LISA is still a good idea. What is a LISA? A LISA is a type of tax-free ISA that allows savers to deposit a maximum of £4,000 per tax year, on top of which the government will add a bonus of 25%, equating to an annual maximum of £1,000. After a minimum of one year, a LISA can then be used to purchase a first home, up to the value of £450,000, or, after the age of 60, be taken out as a pension. A LISA can only be opened between the ages of 18 and 39 but you can continue paying into it until the age of 50. Read more: What is the lifetime ISA? 'Importantly, if you opened a Lifetime ISA aged 18 and contributed the maximum £4,000 every tax year until you turned 50, you could earn up to £32,000 in government bonuses over time,' flags Byrnes. You can choose between a cash or a stocks & shares LISA but, whichever you go for, counts towards your £20,000-a-year ISA allowance. If you plan to use your LISA to buy a first home, you need to live there rather than use it as a buy-to-let investment. Who are they best suited for? As there are several restrictions on use, you need to carefully assess whether a LISA is the right product for you. Anna Yen, CFA at Moneylion, says they work for 'first-time buyers confident of purchasing their home (sub £450,000), basic-rate taxpayers, and young savers who can lock their money away long-term'. She flags that higher earners might prefer pension tax relief to LISA, as this can be up to 45%. In general, LISAs make a good choice for disciplined savers who are confident that they can afford to lock their savings away for the long term. What are the advantages? The main advantage of a LISA is that the government bumps up your savings by 25%, one of the highest savings rate currently available. '[Our] data shows that first-time buyers who use a lifetime ISA buy on average four years sooner than those who don't,' says Richard Dana, founder and CEO of savings and mortgage platform, Tembo Money. 'LISA's bonus and tax-free growth outperform pensions for basic-rate taxpayers. For example, there is no tax on withdrawals, whereas pensions attract income tax,' says Yen. '[They also] fall outside the purview of your estate.' It's also relatively simple to transfer lifetime ISAs between providers if you want to take advantage of a better rate. 'The 12-month time-limit starts from when the first LISA is initially opened, not from when it is transferred,' says Dana. What are the disadvantages? A major issue – and the one central to the current debate – is the withdrawal penalty. 'Savings made into a LISA can only be withdrawn without penalty when used to purchase a first home or accessed after age 60 for retirement,' says Byrnes. 'Withdrawals made for any other reason are considered unauthorised and subject to a 25% penalty, meaning savers not only lose the government bonus but also some of their own contributions.' This works out as the full government bonus, plus 6.25% of their own savings. While some sort of penalty will inevitably be retained, the present high level is dissuading savers who can't predict what the future holds: 'The current early withdrawal charge is harsh on those experiencing unexpected life events and means you could end up with less money than you put in,' adds Murray. Read more: What is an annuity? Everything to know before taking one out Another issue is the house price cap placed on buying a first home. In April 2025, the average London home cost £671,000, according to Rightmove, well above the £450,000 limit. And it's not just London. 'Data suggests that, unless the threshold changes, first time buyers (FTBs) will be priced out of buying a terrace house in 54 regions across the UK by the end of this parliament,' flags Murray. 'We recently surveyed more than 4,000 aspiring FTBs across the country, and 24% want to see the LISA price cap increased in line with house price growth; 23% want to see the LISA's penalty either removed or reduced,' says Byrnes. Another disadvantage is that the age limits are restrictive and exclude older first-time buyers; a trend that, with higher property prices, is only set to increase. Furthermore, it's important to understand the difference between a stocks & shares LISA and a cash one. 'Investment LISAs have higher charges than cash LISAs,' says Yen and these will also go down as well as up, in line with how your investments are faring on the stock market. What's the future of LISAs? The Treasury select committee is expected to announce its findings in the next few weeks and any suggested changes will be brought to parliament ahead of the autumn budget. 'The evidence and recommendations delivered so far range from simplifying the LISA's structure, to expanding its eligibility and increasing limits,' says Byrnes. 'There was much consensus on how the product could be future proofed for the next generation of young savers, including reducing the unauthorised withdrawal penalty and reviewing the property price cap so it reflects changing market conditions.' While LISAs have enabled hundreds of thousands of first-time buyers to purchase their own home, their impact on boosting people's retirement savings is less obvious and this is where the product may require a further re-think. Read more: How rising house prices can impact your finances 10 home upgrades that don't need planning permission What are green mortgages and are they the future?Sign in to access your portfolio
Yahoo
20-05-2025
- Business
- Yahoo
Pros and cons of lifetime ISAs
Lifetimes ISAs, or LISAs as they're more commonly known, were introduced in 2017 to give UK residents between the ages of 18 and 39 the chance to save for their first home or retirement. According to HMRC, more than 1 million LISA accounts had been opened by 2023, with the total amount saved about £6.5bn. While COVID and the post-pandemic housing boom fuelled their use, more recently, there's been a decline in take-up, with higher interest rates and the cost-of-living crisis making home ownership difficult and saving for the long term even harder. 'According to data from HMRC, LISAs only accounted for 4% of total ISA subscriptions between 2022 and 2023,' says Amelia Murray, money expert at Be Clever With Your Cash. As a consequence, the government is currently debating their validity and looking into potential improvements. Read more: Martin Lewis issues lifetime ISA warning to MPs Brian Byrnes, head of personal finance at Moneybox, explains: 'The Treasury select committee launched a call for evidence on the lifetime ISA, looking to understand if the product's original design continues to meet the needs of young savers now and into the future. 'Despite being introduced in 2017, the LISA's core rules have remained unchanged, prompting the committee to examine whether it continues to effectively support first-time buyers and long-term savers.' With this in mind, we spoke to four financial experts to see whether investing in a LISA is still a good idea. What is a LISA? A LISA is a type of tax-free ISA that allows savers to deposit a maximum of £4,000 per tax year, on top of which the government will add a bonus of 25%, equating to an annual maximum of £1,000. After a minimum of one year, a LISA can then be used to purchase a first home, up to the value of £450,000, or, after the age of 60, be taken out as a pension. A LISA can only be opened between the ages of 18 and 39 but you can continue paying into it until the age of 50. Read more: What is the lifetime ISA? 'Importantly, if you opened a Lifetime ISA aged 18 and contributed the maximum £4,000 every tax year until you turned 50, you could earn up to £32,000 in government bonuses over time,' flags Byrnes. You can choose between a cash or a stocks & shares LISA but, whichever you go for, counts towards your £20,000-a-year ISA allowance. If you plan to use your LISA to buy a first home, you need to live there rather than use it as a buy-to-let investment. Who are they best suited for? As there are several restrictions on use, you need to carefully assess whether a LISA is the right product for you. Anna Yen, CFA at Moneylion, says they work for 'first-time buyers confident of purchasing their home (sub £450,000), basic-rate taxpayers, and young savers who can lock their money away long-term'. She flags that higher earners might prefer pension tax relief to LISA, as this can be up to 45%. In general, LISAs make a good choice for disciplined savers who are confident that they can afford to lock their savings away for the long term. What are the advantages? The main advantage of a LISA is that the government bumps up your savings by 25%, one of the highest savings rate currently available. '[Our] data shows that first-time buyers who use a lifetime ISA buy on average four years sooner than those who don't,' says Richard Dana, founder and CEO of savings and mortgage platform, Tembo Money. 'LISA's bonus and tax-free growth outperform pensions for basic-rate taxpayers. For example, there is no tax on withdrawals, whereas pensions attract income tax,' says Yen. '[They also] fall outside the purview of your estate.' It's also relatively simple to transfer lifetime ISAs between providers if you want to take advantage of a better rate. 'The 12-month time-limit starts from when the first LISA is initially opened, not from when it is transferred,' says Dana. What are the disadvantages? A major issue – and the one central to the current debate – is the withdrawal penalty. 'Savings made into a LISA can only be withdrawn without penalty when used to purchase a first home or accessed after age 60 for retirement,' says Byrnes. 'Withdrawals made for any other reason are considered unauthorised and subject to a 25% penalty, meaning savers not only lose the government bonus but also some of their own contributions.' This works out as the full government bonus, plus 6.25% of their own savings. While some sort of penalty will inevitably be retained, the present high level is dissuading savers who can't predict what the future holds: 'The current early withdrawal charge is harsh on those experiencing unexpected life events and means you could end up with less money than you put in,' adds Murray. Read more: What is an annuity? Everything to know before taking one out Another issue is the house price cap placed on buying a first home. In April 2025, the average London home cost £671,000, according to Rightmove, well above the £450,000 limit. And it's not just London. 'Data suggests that, unless the threshold changes, first time buyers (FTBs) will be priced out of buying a terrace house in 54 regions across the UK by the end of this parliament,' flags Murray. 'We recently surveyed more than 4,000 aspiring FTBs across the country, and 24% want to see the LISA price cap increased in line with house price growth; 23% want to see the LISA's penalty either removed or reduced,' says Byrnes. Another disadvantage is that the age limits are restrictive and exclude older first-time buyers; a trend that, with higher property prices, is only set to increase. Furthermore, it's important to understand the difference between a stocks & shares LISA and a cash one. 'Investment LISAs have higher charges than cash LISAs,' says Yen and these will also go down as well as up, in line with how your investments are faring on the stock market. What's the future of LISAs? The Treasury select committee is expected to announce its findings in the next few weeks and any suggested changes will be brought to parliament ahead of the autumn budget. 'The evidence and recommendations delivered so far range from simplifying the LISA's structure, to expanding its eligibility and increasing limits,' says Byrnes. 'There was much consensus on how the product could be future proofed for the next generation of young savers, including reducing the unauthorised withdrawal penalty and reviewing the property price cap so it reflects changing market conditions.' While LISAs have enabled hundreds of thousands of first-time buyers to purchase their own home, their impact on boosting people's retirement savings is less obvious and this is where the product may require a further re-think. Read more: How rising house prices can impact your finances 10 home upgrades that don't need planning permission What are green mortgages and are they the future?Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Independent
16-05-2025
- Business
- The Independent
Experts reveal the three money tips they wish everyone knew
For many, money is a constant source of anxiety. This is especially so given the current economic climate marked by a cost-of-living crisis, inflation, and increasing bills. A lack of financial literacy can also be a barrier to making the most of one's finances. From budgeting to choosing the right savings account and understanding investment options - it is important to make your money work. To provide some clarity, we spoke with Brian Byrnes, head of personal finance at Moneybox, Jason Hollands, managing director at Evelyn Partners, and Mark Weston, director of financial support at Santander, to learn their top money tips. Set some money aside for emergency funds New research by Santander, carried out in April by IPSOS with members of the UK public, shows that one in five (20%) respondents do not save anything from their personal income across the year. However, Weston says saving is important. 'We do recognise that the cost of living and inflation over the last few years has made it much more difficult for people to save,' says Weston. 'However if people do have the ability to save a little, it is a real benefit for things such as rainy day funds or for the future. This means if you have an unexpected expense, having those savings takes pressure off.' When it comes to household finances, investments or utility bills, Weston says keeping on top of the best deals out there is crucial. 'Whether the deals are for your energy costs or anything else for that matter – make sure you've got the best value for money for the service that is needed,' Weston says. 'Also make sure you keep an eye on all those expenses and don't just let them roll over every month.' Do a household budget 'It's important to understand and make sure that your outgoings aren't greater than your income or you're going to end up with a problem and possibly in debt,' Hollands says. 'It can be very easy to build up added costs, such as subscriptions that you don't actually use, so it's important to be aware of those things through a budget. 'When designing a budget for yourself, think about the things you know are essential. This would be the cost of your housing and groceries for example. Then you have your wants, which are the luxuries and nice things to have that you could live without for a period of time. Prioritise what you need most and keep the other things to the end of your budget.' 'It's really important to try and clear any debts, particularly those with high servicing costs like credit cards. People of course have mortgages and other things for a longer term that they aren't going to clear right away,' Hollands says. 'However, if you're paying high levels of interest on a loan or credit cards, you really need to get those under control before starting to put money aside for the future.' Use spare change to invest your money Byrnes says that rounding up spare change and using it to invest could be done rather than saving this money. 'The reason that works is because investing tends to concern or scare people,' he says. Byrnes explains that the initial step of putting money into investments or the stock market can feel risky. 'However we found over the years with clients that the spare change which feels less like real money is easier rather than a big lump sum. It can also break down the barrier to investing and as time goes on, they will start to see the benefit of it without having to necessarily take a big leap with larger sums.' Automate finances in the summer months 'We have found with customers that it's actually easier to save during the winter where there is less social pressures to go out,' Brynes says. 'When we get into the summer months and various social invites such as weddings tend to pop up more – it is important to automate your finances and pay yourself first. 'This should happen on your pay date,' he says. 'Put money into your emergency fund, your savings account, your investment accounts and ensure they come out automatically on the first day you get paid. This is more successful for savings in comparison to doing it at the end of the month – especially at this time of year.'
Daily Mail
13-05-2025
- Business
- Daily Mail
Five of the best cash Isas
Products featured are independently selected by This is Money's specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence. A cash Isa is an essential account for savers that protects you from tax on your interest. This means that your pot can grow without tax dragging it back - something that is especially important for the growing number of 40 per cent taxpayers. This is Money's savings experts scour the market for the real best cash Isa deals - looking for top rates and accounts that come without catches to trip you up. Below you can find a run down of our top deals and you can check all the best cash Isa rates in our savings tables. CMC Invest* easy-access - 5.7% (0.85% bonus for 3 months) - Facts: £1 to open, no limit on withdrawals, short bonus - Transfers in: Yes - Flexible: Yes Trading 212* - easy access - 4.83% with this link - Facts: £1 to open, no limit on withdrawals, 0.73% bonus for 12 months - Transfers in: Yes - Flexible: Yes Moneybox easy access - 5.71% (1.51% bonus rate for 3 months) - Facts: £1 to open, limited to three withdrawals a year, short bonus - Transfers in: Yes - Flexible: No Kent Reliance one-year fix - 4.25% - Facts: £1,000 to open - Transfers in: Yes - Flexible: No Cynergy Bank two-year fix - 4.18% - Facts: £1,000 to open - Transfers in: Yes - Flexible: No
