NS&I has increased the rate on its Junior ISA from a mediocre 2.25% tax free/AER to a competitive 3.25% and its Direct ISA from 0.75% to 0.90% tax free/AER.
The improvement to the Junior ISA is far more interesting than the Direct ISA, as the Junior ISA is now paying a very competitive 3.25% - and even better this new rate applies to both new and existing account holders. Currently, only the Coventry Building Society’s Junior Cash ISA (1) beats it, with a rate of 3.60%.
Junior ISAs are tax-free savings accounts for under 18s, which can be opened by parents or guardians on behalf of their children. Although only a parent or guardian can open the JISA on behalf of the child, anyone can contribute as long as the total amount saved does not exceed the annual allowance (which is currently £4,260 for tax year 2018/19). On the child’s 18th birthday, the account is converted into an adult ISA and the child has unfettered access to the money. There is no access allowed to the money prior to the age of 18.
The new adult Direct ISA rate of 0.90% tax free/AER however, is still disappointingly low – having increased by just 0.15% after dropping by 0.25% last September - even though there was an increase in the Bank of England base rate of 0.25% the month before.
The best rate of 1.50% tax free/AER is with Santander but is only available to new and existing 1|2|3 World or Santander Select customers.
Virgin Money is paying 1.45% tax free/AER on its Double Take E-ISA Issue 5 - although, as the name suggests, only two withdrawals are allowed each year.
The best simple easy access cash ISA, available to anyone and without restricted access comes from OakNorth Bank. Its Easy Access Cash ISA is paying 1.44% tax free/AER. On a balance of £20,000, that means earning £288 tax free per year as opposed to £180 with NS&I.
NS&I has not a made much noise about these rate increases – and in both cases savers can still do better, so it is worth looking at the options open to you.
For more information about ISAs download our FREE guide – Navigating the ISA maze. Or call us on 0800 011 9705.
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