Avoid the Big Four for your cash ISA

Not one of Britain's Big Four High street banks has made it into the top 50 cash individual savings accounts (ISAs) this tax year.

Not one of Britain's Big Four High street banks has made it into the top 50 cash individual savings accounts (ISAs) this tax year.

Cash ISAs are hugely popular because they enable savers to shelter up to £3,000 of bank or building society deposits from tax each year. But figures published today by independent savings market monitor Moneyfacts show the accounts on offer at Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland-owned NatWest have delivered poor value since the start of the 2004-05 tax year.

The best five accounts over the past year, from West Bromwich, Leeds & Holbeck and Portman building societies, as well as Abbey and Marks & Spencer Money, have all paid more than £150 interest.

By contrast, Lloyds TSB's cash ISA, the best account from a Big Four bank, paid £142 and came 54th in the survey. The remaining big banks all performed significantly worse, with Barclays and its subsidiary Woolwich, for example, both paying just £30 in interest. Although the figures sound relatively small, Moneyfacts' survey assumed savers only held £3,000 in each ISA. In practice, many savers have been investing £3,000 a year since the accounts became available in 1999, so the total interest they earn is much more noteworthy.

Rachel Thrussell, Moneyfacts' head of savings, said mutually owned building societies have been much more likely to deliver good interest rates than stock market-listed banks over the past year. "Mutuals take 14 of the top 20 places with the two-year, fixed-rate ISA from West Bromwich Building Society leading the way with a return of £161," she said.

Abbey offered the best variable-rate account, paying £155 in interest. The worst accounts, from Northern Rock and Co-operative Bank, paid just £107 and £114 respectively. The survey also showed accounts with a CAT kitemark, are not necessarily the best payers. Just five of the 20 most-rewarding accounts carry the kitemark.