Savings providers are improving their offerings as the “golden window” to stash money in Isas appears, with the market expected to heat up in the coming weeks.
With the new tax year starting on April 6, savers have just weeks left to use up their current annual Isa allowance, and they may also be looking for a new Isa deal when the new tax year gets under way.
HSBC UK launched an incentive this week of up to £500 cashback for depositing and/or transferring new funds into a cash Isa and/or a stocks and shares Isa this spring.
Running from March 9 to May 11, the offer allows new and existing customers who deposit and/or transfer at least £20,000 into an eligible HSBC Isa to receive a cash payment of up to £500 in their bank account.
The tiered incentive is based on the total amount of new funds added during the offer period, which crosses the tax year.
The offer, which is subject to terms and conditions, means those depositing £20,000 to £49,999 can receive £150 into their HSBC current account; people depositing £50,000 to £99,999 will get £250; and those putting in £100,000 or more will receive £500.
Andrew Hagger, a personal finance expert at Moneycomms.co.uk, said in other moves, Investec Save has increased the rate on its one-year fixed rate Isa to 4.20%, with Nationwide Building Society, Tandem Bank and Aldermore also launching new deals.
Mr Hagger said: “The period from March to May is typically where we see providers battle it out for a slice of cash Isa balances, but this year the fight could be bigger than ever.”
With recent rises in swap rates, he added: “I expect to see the ‘best buy’ rates really hot up in the coming weeks.”
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Currently, people can newly save up to £20,000 annually in cash Isas, stocks and shares Isas, or a mix of both.
From April 2027, the annual adult cash Isa limit will be slashed to £12,000.
Only over-65s will retain the full £20,000 annual cash Isa allowance.
The annual overall contribution limit into adult Isas will remain at £20,000, potentially encouraging some savers who reach the £12,000 cash Isa limit to put more money in stocks and shares.
Alastair Douglas, chief executive of TotallyMoney, said: “Cash Isas let you earn interest on your savings tax-free – and that’s what can make them a better option than a regular savings account – and even more so if you have a decent amount of cash put away.”
With smaller providers sometimes offering stronger rates, he urged savers to shop around.
Mr Douglas also suggested savers read terms and conditions, as some providers “will penalise you for withdrawing your money, and the longer the term, the bigger the hit”.
He added: “If you think you might need access to your cash, then it might be worth putting some into a competitive easy access account, so you don’t get caught out.
“It’s also worth considering lifetime Isas and stocks and shares Isas, but both come with different conditions and risks, so do your research before signing up.”