£50bn in cash Isas set to mature: what to do with your savings next

£53bn worth of fixed-rate cash Isas are due to mature by the end of April, according to new data from Paragon Bank. If the fixed term on your account is almost up, what should you do with your savings next?

Unless you really need the money, now is a great time to reinvest your nest egg in another Isa. Providers usually boost rates in the run-up to the end of the financial year, and you can currently find deals offering nearly 5% AER. 

To help you decide where to move your savings, we reveal the top cash Isa deals and share our tips on making the most of your annual tax-free allowance.

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How do cash Isa rates compare?

The term Isa stands for 'individual savings account'. Isas allow you to save up to £20,000 tax-free every year. Savers currently have a choice of five types of adult Isa, plus the Junior Isa (Jisa) for children.

Cash Isas essentially work in the same way as a traditional savings account, and are best suited for those with short to medium-term savings goals. They have returned to prominence in the last couple of years thanks to a surge in interest rates across the savings market.

The table shows the top rates for fixed-term and instant-access cash Isas, ordered by term. We've excluded deals that come with opening restrictions, for example requiring you to already have a bank account with the provider. 

• Find out more: best cash Isas 2024

Short-term Isas currently offer the highest returns

The best rate currently on the market is 4.9% AER from Trading 212, but the fact that it's for an instant-access Isa account is unusual. 

Historically, rates on two to five-year fixed products have usually been higher than short-term accounts. However, the tables have turned over the past 18 months. 

One explanation for this trend is the Bank of England cutting the base rate more slowly than anticipated. The base rate was frozen at 5.25% for almost a year before being cut in August 2024 and again in November. 

Variable-rate products such as instant-access accounts are usually hit first by base rate cuts, so providers are partly reacting to December's decision to hold the rate at 4.75%.

For fixed-term accounts, banks are hedging their bets that the base rate will start to fall again in the near future and are pricing their deals accordingly.

Why now is a good time to open an Isa

There are two periods of the year when Isa rates tend to get a boost. 

The first 'Isa season' runs from January to March as we approach the end of the tax year and people rush to use their full tax-free allowance. The second is in April when the new financial year begins and allowances are renewed.

It's therefore no surprise that cash Isa rates have risen in the last month. With the exception of instant-access and four-year Isas, all types of accounts have been given a boost, and we may see rates go even higher the closer we get to April.

One word of warning: competitive rates and their timings aren’t guaranteed – with the savings market so volatile, it's possible that providers will amend their offerings at other times of the year too.

• Find out more: what is an Isa?

4 tips to make the most of Isa season

Whether you're looking to max out your tax-free allowance or your fixed-term cash Isa is about to be unlocked, here are a some ways to make the most of the higher rates during Isa season.

1. Shop around and switch

The current top deals are all offered by smaller providers or challenger banks, so make sure you look beyond the high street when shopping for an Isa.

It's especially important to switch if the fixed-term Isa that's maturing holds a large lump sum. Failing to move to a higher rate could cost you in lost interest. 

2. Don't rule out fixing for longer

Instant-access and shorter-term Isas currently offer better returns, but don't just look at the rate when choosing an account.

Remember, instant-access accounts have variable rates. This means providers can cut the interest offered on these deals whenever they like, so your money might not grow at that pace for long. 

Locking your money away in a longer-term fixed Isa guarantees you the same rate for years to come, regardless of what's going on in the rest of the market. 

If you've got savings you won't need for at least five years, you could earn a better return by investing instead. A stocks and shares Isa means all profits and dividends are tax-free.

3. Mix and match

A change in the rules last April lets savvy savers split their annual tax-free allowance across multiple Isas – even if they are the same type. 

You could, therefore, stash a portion of savings in the best rate instant-access Isa, and then place the rest of your allowance in a fixed-term account.

4. Don't forget your family's allowance

If you've used up your annual Isa allowance, but your partner hasn't, you can pay into their account instead, effectively increasing your shared Isa allowance to £40,000.  

If you want to save for your child, you could open a Junior Isa on their behalf. Junior Isas have an annual allowance of £9,000.

Between them, a family of four could potentially save £58,000 a year tax-free in Isa accounts.

• Find out more: cash Isa rules and allowances