Cash ISA vs easy-access savings
Both let you withdraw when you like, but they're taxed differently. Here's how to think about the choice.
The tax difference
Interest in a cash ISA is tax-free within your annual ISA allowance. Interest in an ordinary account counts towards your Personal Savings Allowance; above it, you pay tax at your income-tax rate.
When each wins
If your savings interest is likely to exceed your Personal Savings Allowance, a cash ISA can leave you better off even at a slightly lower headline rate. If you're well within the allowance, the highest headline rate — often an ordinary account — usually wins.
Common questions
- Can I hold both?
- Yes — you can keep an easy-access account and a cash ISA at the same time.
- Is the rate always lower on ISAs?
- Not always, but the tax-free status matters most once you're near or over your Personal Savings Allowance.
Information only, not financial advice.