The top 10 cash ISAs

Whether you need to transfer an existing ISA or invest new savings, these 10 accounts are the best available.

The end of the tax year is rapidly approaching and that means cash ISA providers are out in full swing, offering ever more competitive rates in a bid to attract your cash.

It's the same every March - which is why, if you already have an cash ISA, you probably opened it at around this time. No doubt, that year it was topping all the tables. But what's happened to it since then?

After all, given that the base rate is now sitting at a mere 0.5%, there's a very good chance that the interest it's currently paying is nothing like it was when you opened it.

The chart below shows the best cash ISAs from a year ago, and what their rates are today:

Provider	Account	Deposit	Gross rate 6 months ago	Gross rate following last week's base rate cut
Barclays Bank	Tax Haven ISA	£1	6.31%	2.10%
Scarborough BS	Notice ISA	£1,000	6.30%	2.80%
Abbey*	Direct ISA Issue 2	£1	6.25%	1.80%*
Alliance & Leicester	Direct ISA Issue 4	£1	6.25%	1.55%
Saffron BS	Cash ISA 60 Day Notice	£1,000	6.25%	1.76%
		Average:	6.27%	2%

Source: Moneyfacts on 25.02.09 and lovemoney.com. *Abbey pays 1.8% including a bonus, 0.30% excluding the bonus.

Looking at the above rates, I wouldn't blame you for feeling a little depressed. After all, over the past year, the average rate of return has fallen from a tasty 6.27% to a measly 2%. In fact, it's so depressing I wouldn't be surprised if you were thinking of giving up saving all together!

But before you do, there's still a very good reason for keeping your money in a cash ISA...

Cash ISA delights

As I have said before, in these uncertain times, it's more important than ever to build up a rainy day fund. And while it can be disheartening to see the interest rate on your savings account plummet, the great thing about cash ISAs is that they are tax free.

This means that if you were earning 3.51% AER on your cash ISA for example, it would be the equivalent of 4.39% for a basic taxpayer, or 5.85% for a higher rate taxpayer. That doesn't seem quite so bad, does it?

The top rates for transfers

While the cash ISAs mentioned above are looking pretty sorry for themselves, believe it or not, there are better rates to be found. Have a look at these five:

Provider and account	Interest rate (AER)	Minimum deposit	Access	Other conditions
Natwest e-ISA	3.25% (£1-£9,999); 3.51% (£10k+) variable	£1	Instant	Need to have a current account or instant access savings account with Natwest
M&S Money Advantage Cash ISA	3.10% variable	£100	Instant	Rate includes a 1% bonus until 21 April 2010
First Direct e-ISA	3.10% fixed until 30 April 2010	£1	Instant	Rate drops to 0.50% variable on 1 May 2010
Halifax ISA Direct Reward	3% guaranteed for 12 months	£1,000	Up to 4 withdrawals can be made per year	Minimum withdrawal of £10. Rate drops to 1% variable after first year
Standard Life Direct Access Cash ISA	3% variable	£1	Instant

All these accounts allow transfers in from existing cash ISAs. (Remember, to protect the tax-free status of your money, you should never withdraw cash from an ISA to invest in another account. Instead, you should ask your new provider for a form that will allow you to transfer the money directly into your new ISA.)

Top cash ISAs overall

If, on the other hand, you have yet to use up your ISA allowance this year, there are even better rates on offer. Just take a look at these:

Provider and account	Interest rate (AER)	Minimum deposit	Access	Other conditions
Barclays Golden ISA	3.61% variable	£1	Instant	Rate includes 1% bonus for 12 months
Natwest Cash ISA Plus	3.51% variable*	£1	Instant
Abbey Reward ISA	3.50% variable	£1	If you make a withdrawal in the first year, you will lose bonus rate	Rate includes 2% bonus at end of first year
Alliance & Leicester Reward ISA	3.50% variable	£1	If you make a withdrawal in the first year, you will lose bonus rate	Rate includes 2% bonus at end of first year
Nationwide 3 Year Fixed Rate ISA Bond	3.25%	£1	No withdrawals permitted

*Advantage Gold or Advantage Private account customers will earn 0.5% bonus (4.02% AER) if they open Cash ISA Plus by 20 April 2009. Cash ISA Plus also available at Royal Bank of Scotland with 0.5% payable to Royalties Gold, Royalties Premier or Royalties Private account customers. None of these accounts allow transfers in from existing ISA accounts.

In my opinion, the new Barclays Golden ISA is the clear winner here, paying an impressive rate of 3.61% AER. Bear in mind, however, that this rate includes a 1% bonus for one year - and Barclays has offered a very poor service to ISA customers in the past.

As you can see, you'll earn far more interest if you stash your cash in a new ISA than if you keep it in one of last year's best buys. So if you took out a cash ISA a year or so ago, it really is worth checking the rate and transferring your money to a better account - you've got nothing to lose, after all, and lots of juicy interest to gain.

And if you haven't used your cash ISA allowance yet, bear in mind that time is not on your side. You only have until 5 April -- that's just under four weeks away -- to use up your 2008/9 allowance and put up to £3,600 into a cash ISA.

Remember you can open many of the best buys mentioned above with just £1.

So don't delay! Sort out your ISA today and stop the taxman getting his grubby hands on your hard-earned cash!

More: Should you take more risk with your savings? | Why ISAs are still worth it