Rates on popular easy-access accounts are falling – but there is one simple step that you can take now to protect yourself.
Fixed-rate cash Isas look comparatively attractive now and I urge you to make use of them if you are happy to tie your money up. The best rates are unlikely to last long.
At first glance, the best fixed-rate Isas look less generous than the top easy-access accounts.
But, unlike easy-access accounts, they do not come with short-term bonuses that are designed to tempt you in but quickly fall away.
For example, app-based CMC Invest pays a top 5.44 pc on its easy-access account. But this includes a bonus which lasts for just three months, with an underlying rate of 4.59 pc.
Savings rates are in line for another hit if the Bank of England cuts the base rate from its current 4.25 pc to 4 pc at its next meeting on August 7.
Easy-access rates tend to be the first to fall – the fixed-rate accounts follow shortly after.
In fact, some easy-access rates are already dropping ahead of the widely expected base-rate cut.
Last week, Ford Money cut the rate on its Flexible Isa from 4.35 pc to 4.18 pc.
But in the fixed-rate Isa space, competition is thriving for now.
App-based provider Tembo launched its first fixed-rate Isa earlier this month, at a top rate of 4.27 pc for 12 months. Paragon Bank has come out with a 15-month Isa at 4.28 pc which you can open via the post or online. You can also take monthly interest at 4.20 pc. Both accounts have a minimum balance of £500.
Yesterday, Skipton BS launched a 15-month fixed-rate Isa at 4.06 pc - an attractive rate for an account that can be managed in-branch.
Unlike with taxable bonds, providers who offer fixed-rate Isas must let you take your money out during the term if you need to. They will charge you for it - typically three months' interest.
If you take money out during the term, Tembo charges you 90 days' interest (£10.52 for each £1,000 withdrawn), while at Paragon it's a hefty 120 days (£21.10 per £1,000). At Skipton you will pay the equivalent of 90 days' interest (£10 per £1,000).
Other top rates for one year include Vanquis Bank, Vida Savings and Kent Reliance at 4.25 pc, along with Hodge Bank at 4.24 pc.
These rates all beat the rise in the cost of living, which is currently running at 3.6 pc as measured by the consumer prices index of inflation.
You'll likely end up earning slightly less if you want to stick to the High Street.
Top rates here include Cumberland Building Society (locals only) at 4.2 pc, Furness and Nottingham building societies at 4.15 pc, and Coventry BS at 4.12 pc.
Among the worst are Halifax and Lloyds which pay just 3.7 pc. Santander and NatWest pay a better 4 pc.
Best-buy tables are often stuffed full of easy-access accounts that come with catches. Research by Investec Save shows that eight out of ten of the top-paying accounts come with strings attached.
I don't include accounts with gimmicks in my star buy tables but do keep you informed of what is on offer.
Short-term bonuses can make accounts less competitive over time. Or they limit the number of times you can take money out of your account or demand you hold a current account with the provider to qualify for the top rates.
A new account, out on Friday, has now joined the ranks. Oxbury Bank launched its Easy Access Bonus Base Rate Tracker at 4.48 pc. It comes with a 0.7 percentage point bonus which only lasts three short months until mid-October.
The top rate comes from Cahoot's Sunny Day Saver at 5 pc - but it only pays this amount on the first £3,000 in the account. It pays no interest at all on anything above this. And, after a year, you are moved into another account which is now paying just 1 pc. Chase Bank also pays 5 pc but the rate is only available to those opening a current account with the bank. The rate includes a 2.25 percentage point bonus paid for a year.
Atom's Instant Saver Reward pays 4.6 pc but this drops to 2.5 pc in any month you make a withdrawal.
Next comes Cahoot again with its Simple Saver, Principality BS Online Bonus Triple Access and West Bromwich Four Access Saver all at 4.55 pc. The Cahoot account comes with a bonus paid for 12 months while Principality and West Bromwich limit the number of withdrawals you can give you a bonus boost.
Coventry BS 4 Access Saver and Skipton Bonus Saver at 4.5 pc also come with restrictions.
It is not until you get to number eight that you find a simple savings account which does not involve jumping through hoops to get the best rate.
Secure Trust Easy Access pays 4.45 pc and Kent Reliance Easy Access Savings 4.41 pc.
Other top rates with no tricks include Charter Savings Bank at 4.36 pc, Spring Easy Access at 4.3 pc and Investec Flexisave and RCI Bank Freedom both at 4.2 pc.
David Hunt at Investec Bank, says: 'Instant access accounts should be easy to understand but that is clearly not the case. As the analysis shows, the number of accounts which have a range of terms and conditions that can be easy to overlook remains consistently high.'
Skipton Building Society has launched a new easy-access cash Isa which you can open online, through the post, over the phone, in its branches or through its app - as long as you have an email address.
Paying 4.12 pc, it is an attractive and near-top rate for a branch-based and postal account, and you can open it with just £1. It's flexible so you can take money out and replace it in the same tax year, with any money you put back in counting towards your £20,000 Isa allowance.
How can it pay this top rate? The clue is in the name - the Annual Allowance Cash Isa. You can only put in this year's allowance and can't transfer your Isa accounts from previous tax years.
