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Variable Rate Cash ISAs

Variable rate cash ISAs are tax-efficient savings accounts that pay a variable rate of interest. Any money held within the account can either be accessed immediately or after a certain notice period, depending on the kind of account chosen, with any interest earned being entirely tax-free. Want to see what’s available? Use our comparison table below to find the best variable ISA rates across the market.

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Best Rates - Variable Rate ISAs

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  • Plum Plum Cash ISA
    AER
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    5.18%
    Includes a bonus for 12 months
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Trading 212 Cash ISA
    AER
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    4.90%
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
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    Daily
    Go To Provider's Site
  • Mansfield BS Double Access Cash ISA (1st Issue)
    AER
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    4.75%
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
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    Yearly
    Go To Provider's Site
  • Chip Chip Cash ISA (powered by ClearBank)
    AER
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    4.58%
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Paragon Bank 40 Day Notice Cash ISA Issue 4
    AER
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    4.40%
    Account Type
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    Cash ISA
    Notice
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    40 Day
    Interest Paid
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    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    4.40%
    Account Type
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    Cash ISA
    Notice
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    40 Day
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Skipton BS Step Up Cash ISA Saver Issue 3
    AER
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    4.35%
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
    Press for help tip
    Anniversary
    Go To Provider's Site
  • Harpenden BS 45 Days' Notice ISA Account (Issue 1)
    AER
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    4.30%
    Account Type
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    Cash ISA
    Notice
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    45 Day
    Interest Paid
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    Yearly
    Go To Provider's Site
  • Kent Reliance Cash ISA - Easy Access - Issue 54
    AER
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    4.30%
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
    Press for help tip
    Yearly
    Further Options ˅
    Go To Provider's Site
    AER
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    4.30%
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
    Press for help tip
    Monthly
    Go To Provider's Site
  • SAGA Saga Cash ISA
    AER
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    4.30%
    Includes a bonus for 12 months
    Account Type
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    Cash ISA
    Notice
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    None
    Interest Paid
    Press for help tip
    Monthly
    Go To Provider's Site
  • Charter Savings Bank Easy Access Cash ISA - Issue 54
    AER
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    4.26%
    Account Type
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    Cash ISA
    Notice
    Press for help tip
    None
    Interest Paid
    Press for help tip
    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    4.26%
    Account Type
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    Cash ISA
    Notice
    Press for help tip
    None
    Interest Paid
    Press for help tip
    Monthly
    Go To Provider's Site
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Eligible deposits with UK institutions are protected by the FSCS up to £85,000 per person per institution. Covers all new UK bank and savings accounts for UK customers.

Disclaimer

All rates subject to change without notice. Please check all rates and terms before investing or borrowing.

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Variable rate cash ISAs explained

Variable cash ISAs typically come in two forms: notice ISAs and easy access ISAs.

Variable rate ISAs with a notice period usually require some advance warning before the bank or building society will let you withdraw funds from your account. Some accounts will permit withdrawals without this notice period, but this will typically result in an interest penalty.

Easy access ISAs, meanwhile, generally allow additions and withdrawals without limit, offering complete flexibility. However, some providers restrict how many withdrawals can be made in a year, so make sure to check.

Whichever kind you choose, your savings interest will remain tax-free for as long as your money is held within the ISA. This means you can accumulate quite a savings pot over time, which may otherwise have gained enough interest to breach the personal savings allowance.

Just be mindful of your annual ISA allowance. You’re still only able to save up to £20,000 in an ISA per tax-year – which can be split across different types of ISA if you prefer – but if your ISA is flexible, you can withdraw and replace funds within the same tax-year without affecting your allowance. However, if it isn’t, any deposit into the account will count towards your allowance, even if you’re replacing money that you’ve previously withdrawn.

Pros and cons of variable cash ISAs

  • Any interest earned is tax-free while the funds remain in the ISA
  • Flexibility – money is available instantly or with a certain amount of notice, and you can add funds throughout the year if you’d rather not invest the full ISA allowance in one go
  • You can withdraw and replace funds within the same tax-year if needed (if your provider allows this)
  • Variable cash ISA rates tend to be lower than their non-ISA counterparts, but this depends on the wider market
  • Some providers impose interest penalties for earlier access or a certain number of withdrawals
  • Because the interest rates are variable, they can change at any time, which means your returns are not guaranteed

How to get the best variable ISA rates

To get the best variable ISA rates, it’s important to compare the market thoroughly. Make sure to look at features of the account beyond the headline rate, such as withdrawal restrictions, and bear in mind that you may need to be flexible when it comes to provider – the top rates often come from challenger or digital banks, and even accounts from more traditional brands will often ask you to manage things online.

The time of year could have an impact as well. Most providers tend to offer their best rates around ISA season, as they look to encourage savers to use up the last of their ISA allowance for one tax-year and start early on the next. Such heavy competition means it can be a great time to compare ISA rates, but that doesn’t mean you shouldn’t bother at other times of the year. Our chart outlines the best variable ISA rates on offer at all times, helping you make the right decision.

Variable vs. fixed rate cash ISAs

Variable cash ISAs are designed to be accessible, offering easy access to your money either with or without a notice period. Yet there also comes an element of uncertainty – because the rates are variable they can change at any time, so you can never be sure of your returns.

This is in contrast with fixed rate ISAs, which typically do not allow any access until a certain period has passed, in exchange for receiving a fixed rate of interest. Most will only allow lump sum deposits as well, which means that you’ll know exactly how much interest you’ll receive after the term comes to an end.

It used to be the case that the longer the fix, the higher the rate, but today that’s no longer guaranteed. In many cases, variable cash ISA rates can actually be higher than for fixed rate deals. Just bear in mind that even the best variable ISA rates can lessen over time, though while this makes it a gamble, the access options these accounts offer could make it worth the risk.

Variable ISA or variable savings account?

You may be wondering whether you should opt for a variable cash ISA or a standard easy access savings account. At first glance, the non-ISA deal may seem like the obvious choice, particularly given that standard variable rate deals tend to pay higher interest rates than their cash ISA alternatives. There are also fewer restrictions, with most not capping the amount that can be invested, and they won’t normally have such set rules on transfers or withdrawals.

However, the main benefit of ISAs is their tax-free status, and for some, this can be key. Those who are higher-rate taxpayers and/or have built up a substantial savings pot may find that they breach their personal savings allowance by keeping their cash in non-ISA products, so instead opt for a variable cash ISA to reduce their tax liability.

Alternative types of ISA you may be interested in

Not sure if a variable rate ISA is right for you? Consider these options instead:

  • A stocks & shares ISA could be a great choice for those who are happy taking on a bit of extra risk for the potential of greater returns. Just remember that there’s no guarantee – your returns are based on the performance of your chosen funds rather than a pre-agreed interest rate, and there’s the chance you could end up with less than you initially invest.
  • If you’re saving up for your first home or want an extra savings pot for retirement, you may like to consider a lifetime ISA. These offer a Government top-up of 25% on everything you save, though you’re restricted to depositing up to £4,000 a year and can’t access the money for anything other than a first home or retirement.
  • If you want to get into the savings habit while continuing to benefit from tax-free returns, a regular savings cash ISA could be another option.

Take a closer look at our ISA charts to see what else is available, and stay up to date with our regular overview of the best cash ISA rates on offer.

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Leanne Macardle

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