Urgent. Just 9 days to pay in to a 2017/18 cash ISA – but should you?

Don’t use your cash ISA allowance & it’s gone, yet savings pay more. Which wins? One way to find out… FIGHT

We used to shout at this time of year to use your cash ISA allowance – which for this tax year is A?20,000 – as it’s a normal savings account where you don’t pay tax on the interest. But as virtually everyone can earn tax-free interest on normal savings now, the choice between this and ISAs isn’t as clear-cut…

The cash ISA advantage is there’s no tax – but 95% pay no tax anyway. That’s because the personal savings allowance lets basic-rate taxpayers earn A?1k in interest tax-free (higher rate it’s A?500; top-rate payers get no allowance). That means they’ll need A?77k in savings (A?38k for higher) before paying tax at current rates. So the tax advantage of cash ISAs only matters for big earners and those with large savings.

Cash ISAs vs normal savings – which wins? For most, it’s the best payer, regardless of ISA status. And as the table below shows, normal savings generally beat cash ISA rates hands down. The exception is in easy access, where Nationwide recently launched a deal equal to or better than top standard savings…

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