So where should you put your savings – even if the rates aren't anything to get too excited about?
Here The Sun Online explains what an Isa is and why there are probably better places to leave your savings.
What is a Cash Isa?
Each tax year, everyone over the age of 16 in the UK gets an Isa (Individual Savings Account) allowance which lets them save cash tax-free.
This means they can earn interest on their savings in a bank, building society or other financial provider, without any tax deducted.
Savings kept in an Isa will continue to earn interest tax-free until the money is withdrawn from the account.
The maximum amount you can put away for the 2018/19 tax year is £20,000.
Are Cash Isas the only way you can save tax-free?
For many years, Isas were the number one option for savers, as you can shelter your hard-earned cash away from the hands of the tax-man.
But all that changed in April 2016 when the government introduced a big shake-up to something called the Personal Savings Allowance (PSA).
Under the scheme, basic rate taxpayers can now earn £1,000 in interest a year tax-free – in whatever account they're saving in – while if you're a higher-rate taxpayer you earn up to £500.
At the time, the government estimated the change meant the vast majority – around 95 per cent of adults – now no longer pay any tax on their savings.
Money expert, Andrew Hagger, said: "You can earn £1,000 per year in interest without paying tax, so a standard savings account makes better financial sense than an Isa."
CURRENT ACCOUNT SAVINGS
Here are some of the highest paying current accounts around.
Nationwide FlexDirect – You'll get 5 per cent on balances up to £2,500 for the first year you have the account before it drops to 1 per cent.
Tesco Bank Current Account – This pays 3 per cent on balances up to £3,000, until 1 April 2019 (at the earliest). To get the interest you must pay in £750 a month and pay at least three direct debits from it each month.
However, you are allowed to open two accounts, so you could get 3 per cent on up to £6,000.
TSB Classic Plus – You'll also get 5 per cent with TSB but only on balances up to £1,500.
What are the best easy-access Cash Isas?
With cash Isas now without their main selling point, most savers will want to look at whatever account is paying the best rate to earn the most interest – and you wont find those in the old tax-free accounts.
But if you're still looking for an Isa, then The Sun Online has had a look at what accounts are topping the best buy tables at the moment.
These easy access accounts mean you can take your money out without having to pay a penalty.
- Virgin Money Double Take E-ISA – Apply Here
Rate: 1.38 per cent
Interest earned on £1,000: £13.80
Please note: Only two withdrawals can be made each calendar year
- Leeds Building Society Online Access ISA – Apply here
Rate: 1.38 per cent
Interest earned on £1,000: £13.80
Please note: You can only hold onto the account until December 1 2019, after which your money is transferred to an Online Maturity account
HOW DO YOU SWITCH ISA PROVIDERS
Never withdraw money from your ISA account to put it into your new one – if you do it'll lose its tax free benefits.
Instead you need to follow the simple transfer process.
Make sure that the new account you want to use accepts transfers (not all do) and then fill in the ISA transfer form with the new provider.
It will arrange for your savings to be transferred over, with the process taking no more than 15 working days.
And remember, you can only have one "active" cash ISA per tax year.
What are the best fixed-rate cash ISAs
If you can afford to tie your money up for a while, you'll find better rates of interest with fixed-term accounts.
Remember with these type of accounts, you will still be able to access your money if you need it but you'll likely have to fork out an expensive penalty to do so.
Make sure you know what you'll pay if you need to access your money before you sign up.
Best for one year
- Aldermore One Year Fixed Rate Cash ISA – Apply here
Minimum investment: £1000
Rate: 1.6 per cent
Interest earned on £1,000: £16
Best for two years
- Bank of Cyprus Two Year Fixed Rate cash ISA – Apply Here
Minimum investment: £500
Rate: 1.82 per cent
Interest earned on £1,000: £18.20
Best for three years
- Bank of Cyprus Three Year Fixed Rate Cash ISA – Apply Here
Minimum investment: £500
Rate: 1.92 per cent
Interest earned on £1,000: £19.20
Best for five years
- Shawbrook Bank Five Year Fixed Rate Cash ISA Bond – Apply Here
Minimum investment: £5,000
Rate: 2.25 per cent
Interest earned on £1,000: £22.50
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