There are 582 deals to pick from by 151 providers, which is also at its highest ever level, according to the Moneyfacts UK Savings Trends Treasury Report.
Overall, there are 2,157 savings deals to choose from this month – another record since Moneyfacts started collecting savings data in February 2007.
The popularity of the cash ISA has surged in the last year and 750,000 more savers opened an account during the 2022/23 tax year than the year before. Its resurgence means around eight million account holders have a cash ISA in the UK.
The benefits of a cash ISA include building up your savings without paying tax on the interest and the ability to withdraw your funds – if needed – with no fees.
Rates for ISAs also rose for the first time since August to stand at 3.05%, while the average notice equivalent account also crept up to 3.92%.
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The average rate for an easy-access account also rose for the first time since August by a fraction – from 2.89% in January to 2.9% in February.
ISA season is almost in full flow and banks are upping the ante with better interest rates so customers use up their £20,000 allowance, according to Rachel Springall, finance expert at Moneyfacts.
‘Encouraging to see rates rise’
Springall said: “Providers have been working hard to inject some healthy competition to entice deposits. It is also encouraging to see rates rise between the start of 2025 and the start of February across the savings spectrum, bar notice accounts, which remained unchanged, but any swift celebration will be dampened by anticipated savings rate cuts, amid a drop to the Bank of England base rate and tumbling swap rates.
“Those savers comparing cash ISA rates should keep in mind that not every savings provider offers a product within a tax-free wrapper as part of its range, so they will find fixed rate bonds paying higher rates on average.
“However, due to an income tax threshold freeze until 2028, those who end up as a higher-rate taxpayer will be subsequently halving their Personal Savings Allowance (PSA), so any interest earned beyond the allowance on a fixed bond will be taxed. Cash ISAs are therefore a salvation for savers and will be sought-after both for this tax-year and for the future.”
She added: “Whichever account savers choose, it’s imperative they review their pots as, worryingly, £300bn is sitting in UK current or savings accounts earning no interest whatsoever, according to the Bank of England. Savers must ensure they choose a deal [that] pays a competitive rate of interest but also provides a real return against the eroding impact of inflation, which is expected to rise this year.”
