Best Variable-Rate ISA

Virgin Money is one of the biggest banks in the UK whose ISA offers you flexibility and most management and payment features. It offers an easy-access variable ISA exclusive to its current account holders. It’s possible to switch to a current account and get access to it. You can manage your ISA in the app, online, by telephone, post, or in-store.

The bank lets you open this Cash ISA in-store or online, and you also have plenty of withdrawal options.

	Name	Score	Visit	Disclaimer
	Virgin Money	8.0	Visituk.virginmoney.com

Shawbrook is a specialist bank that offers financing and savings products. Its easy-access variable ISA is a market leader when it comes to interest rates. However, it has a cap on the amount of money you can hold in this ISA, which can be tricky for people with larger savings goals.

When it comes to opening and managing an ISA, you can do everything online quickly and efficiently. However, the minimum withdrawal at any time is £500.

	Name	Score	Visit	Disclaimer
	Shawbrook Bank	7.1	Visitwww.shawbrook.co.uk/

Santander’s eISA combines the quick and modern features of an online ISA with the safety of a larger bank. However, this ISA is different from other variable-rate ISAs in one aspect: the account and interest rate last for 12 months from the day of opening only.

While your minimum balance is £1, your maximum is £2 million, which is twice as high compared to Cynergy Bank. Also, you can make deposits via standing order, one-off payments or online transfers.

Paragon offers one of the highest interest rates you can find for variable-rate notice ISAs, with 4.60% for its 120 days notice ISA and 4.65% for the 180 days notice. The ISA can be opened, managed, and transferred online and the website is quick and intuitive.

However, there is no app, so if it’s a dealbreaker, you can check out Santander or Virgin Money.

Cynergy is a specialist bank with great savings accounts including a top easy-access online ISA. While it does have a higher interest rate compared to Santander’s eISA at 3.20%, it doesn’t come with as many payment, transfer, and account options compared to the classic large bank.

On the other hand, it does have excellent reviews for customer support and comes with easy setup and management.

	Name	Score	Visit	Disclaimer
	Cynergy Bank	7.4	Visitwww.cynergybank.co.uk/

As opposed to fixed ISAs, a variable ISA is flexible in several ways:

• It lets you deposit money whenever you want.

• Your access to money is either instant or relatively easy (terms vary by provider and type of account).

• You can hold the money in a variable-rate ISA for as long as you want.

Is it better than a fixed-rate ISA?

The answer can depend on what you need from your savings account:

• A variable-rate ISA can be better than a fixed-rate cash ISA accounts if you want to save regularly and have free access to your savings. This flexibility lets you cover any unexpected expenses without losing money on penalties.

• A fixed-rate ISA can be better if you know you won’t need a certain sum of money during the fixed period. So if you’re saving with a particular goal in mind, the fixed (and usually higher) rate lets you calculate the exact sum you should have at the end of the term.

The two main types of variable-rate ISAs are the Notice ISA and the Easy-access ISA, both suitable for different purposes. Here are the two types in more detail:

Notice ISA

Having a notice ISA means that when you want to withdraw money, you need to give notice to the provider in an agreed way (e.g. email, telephone, online) and take the money out after an agreed time has passed (e.g. 60 days). However, if you need to withdraw the money or close the account before the notice period ends, you will usually pay a penalty.

Easy-access ISA

On the other hand, easy-access ISAs give you instant access to your savings with no penalties. However, instant access to your savings usually means lower interest rates compared to notice ISAs.

The main differences between fixed-rate and variable-rate ISA and fixed-rate ISAs come down to different interest rate and access rules.

Fixed-rate ISAs have interest rates that don’t change for a set period (e.g. one year). However, your money is locked away until the period is over and your account reaches maturity. This also means you won’t be able to access it without losing your tax-free status and interest, which can be quite costly.

It’s the opposite with variable-rate ISAs: interest rates can change, but you can access your money more easily, either instantly or after a notice period.

Here’s a quick overview

Before you decide to open a variable-rate ISA, consider the what you can gain or lose:

Let’s assume you put £10,000 into a variable rate ISA with an interest rate of 3.75% for three years and the interest is paid annually. You don’t take out any money.

At the end of the first year you would have £10,375. After the second year and another £10,000, you would have £21,140. If you added another £10,000 in the third year, at the same average rate, you would have £33,475.
This means you earn £3,475 in tax-free interest.

However, to decide if a variable-rate ISA is the best way to grow your cash, you need to take the following rules into account.