Best ISA

Firstly I'm sure what you're basing your statement on whether this is based on 1 organisation or a general statement based on your findings on a website.

Secondly I would say in the past for a 40% tax payer even if an ISA rate was offering a lower headline rate by the time tax on interest is declared I would by extremely surprised if the net interest on savings account would be higher than an ISA and would generally expect this to be the case for basic rate tax payers. For non tax payers they may well be better off with general bank accounts.

I personally suspect from a non tax payers point of view, a bank doesn't need to offer as high an interest rate for ISA's as account holders would be less likely to move their ISA money than money in another general savings account.

In terms of the 'best ISA' it depends on your criteria, there are plenty of internet sites giving factual information on current interest rates but lessons should be learnt from what has happened with for example Icelandic banks where lots of people went for the 'best ISA' those offering the highest interest rates are generally those banks most desperate for money. You will be covered under the financial services compensation scheme if a company does go bankrupt but you probably wouldn't want to go through that process. I would generally recommend from a safety point of view something like the national savings ISA as this is backed directly by the government or a large financial institution such as the Abbey rather than a small bank which may be offering a higher rate but may not be around in 6 months.


I hope this helps, Steve
I am an Independent Financial Adviser.

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