Consumers face record savings options in final year of £20,000 cash ISA allowance
Savers across the UK are being offered a record number of accounts and products, and with interest rates still well above 4 per cent on the most competitive options, they need to make sure their cash is doing well.
Data from Moneyfacts shows the number of savings accounts, including ISAs, has risen to 2,486, the highest number on record. Cash-only ISAs, meanwhile, also saw the biggest monthly increase since May 2024, with a total of 712 offers, again the highest figure since Moneyfacts started recording.
Both figures come as the final tax year approaches when all savers can put the £20,000 annual allowance into a cash ISA.
From April 2027, people under 65 will only be able to save a maximum of £12,000 in tax-free savings packages, with an additional £8,000 set aside for investment purposes such as a stocks and shares ISA.
This is part of the government’s wider effort to encourage more people to invest and create wealth for the future.
High interest rates are important not only to get a good return on cash, but also to ensure that money does not lose its value or purchasing power when measured against rising prices, i.e. inflation, which is currently around 3 percent and is expected to rise.
This means consumers should try to exceed this rate at a minimum whenever possible when it comes to savings accounts, with many places currently still offering rates of 4.5 percent or even higher.
“Competition in ISA season this year has been particularly strong, fueled by the fact that this is the last year for savers under 65 to use their full £20,000 allowance. Providers are encouraging new deposits with attractive deals,” said Caitlyn Eastell, personal finance analyst at Moneyfacts.
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“Savers should benefit from all-time highs and this could be particularly timely as the new tax year is the perfect window to review their existing deals and switch to ensure they can maximize their returns before thresholds tighten.
“The number of savings deals paying above the Bank of England base rate has risen to its highest level since December 2021. While this is largely attributable to the base rate remaining unchanged for several months, providers are also proactively adjusting rates in response to changing interest rate expectations.
“Fixed rates reflect this change, with the average one-year ISA rising above 4 per cent to its highest point since May 2025, while its non-ISA counterpart saw its biggest rise since September 2023. Savers can benefit from more competitive returns in this environment, but this can be a difficult balancing act because sharp rises in household bills and inflation can be quickly offset, meaning savers may be left out of pocket.”
Meanwhile, the bank noted growing evidence that many households have more than one money account but do not have a clear overview of their true financial situation.
The bank says examining accounts, including joint and old current accounts, can reveal unexpected cash reserves, help families understand which subscriptions they were paying for but no longer using, and help with better budgeting, providing a better understanding of where income and expenses match up.
“For many households, financial stress is exacerbated by complexity. By taking a simple, step-by-step approach, people can apply structure and clarity to their day-to-day financial management,” said Chris Waring, CEO of this bank, and recommended that each savings account have a specific role, such as daily spending, a long-term emergency buffer, or fixed-term savings accounts with strong rates for predictable returns.
Analysis by savings app Spring shows that the vast majority of premium and paid accounts come with lower returns, tiered interest rates or withdrawal restrictions, underlining the need for consumers to be aware of where they choose to put their cash.
Their research showed that a quarter (23%) of easy-access savings accounts in the premium current accounts market are exempt from additional restrictions; these include lower returns after £4,000 in a single account, a puny 1.35 per cent rate on balances under £100,000 elsewhere and withdrawal limits of almost a third (30 per cent).
