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Only eight days left to beat the cash Isa deadline

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Smart savings: You can put up to £5,340 into a cash Isa savings account this tax year and earn tax-free interest

It's time to act quickly: savers have just eight days left to make use of their cash Isa allowance for this tax year, which ends on April 5.

You’ll need to move swiftly because, with some top payers, you have to send a cheque to put money in rather than switching funds from your current account.

As the countdown to the end of the tax year begins, the battle for savers' money is hotting up as banks and building societies raise rates on their cash Isas or launch top-paying accounts.

You can put up to £5,340 into a cash Isa savings account this tax year and earn tax-free interest on your money.

If you don’t use your allowance, you lose it and cannot carry it over until next year.

You can still grab a top deal

One of the latest deals to jostle for your cash comes from Cheshire  BS, part of Nationwide, which has raised the rate on its Direct Isa to 3.5 per cent [more details]. It includes a bonus of 2.5 per cent payable until September next year, after which the rate drops to 1 per cent.

You can open the account, minimum £1,000, over the telephone or internet, but have to make deposits and withdrawals by telephone.

  More... TABLES: Best cash Isa savings rates Our five favourite best buy cash Isas for 2012

Elsewhere, Santander Direct Isa 9 pays 3.3 per cent, including a 2.8 point bonus paid for the first 12 months on £2,500 or more [more details]. You can open an account over the internet or telephone and transfer money in — or in the branch. But you cannot run it through the branch.

And you can earn 3.1 per cent with Skipton BS’s new Online Bonus Isa, including a 1.1 percentage point bonus for 12 months on £1 or more [more details]. You can open it using your debit card or electronic payment rather than sending a cheque.

With Marks & Spencer, which pays 3 per cent, you can open the account over the telephone or internet using your debit card, minimum £100 [more details].

The rate is lower than the very best deals but there is no bonus, so you don’t need to worry about moving your money in a year’s time when many rates will drop substantially.

If you want to stick to the High Street, Virgin Money Easy Access Cash Isa, available through Northern Rock branches, pays 2.85 per cent flat rate with no initial bonus [more details]. Otherwise Barclays Isa Saver Issue 2 [more details], Halifax Isa Saver Variable [more details], and Bank of Scotland Access Cash Isa [more details] all pay 2.75 per cent, including a bonus. At C&G, you earn 2.7 per cent for the first year [more details] and 2.65 per cent at Lloyds TSB [more details].

...but some rates are dropping off

Some banks, including Sainsbury’s and Intelligent Finance, have already closed their top-paying, easy-access cash Isas for this tax year.

AA Savings, part of Halifax, has closed its top-paying internet-based account but replaced it with AA Access ISA (Issue 3), which also pays 3.5 per cent on a minimum £2,500 [more details].

The rate includes a 3 percentage point bonus paid for the first year. You have to open and run the account through the post.   

If you are happy to tie up your money for a year, you can earn a fixed rate of 3.6 per cent with Saga’s new deal, minimum £1— although the deal is limited to those aged 50 or over [more details]. Santander pays 3.5 per cent on £2,500 or more on offer through its branches [more details].

Cheshire pays 4 per cent fixed for 18 months [more details], while BM Savings, part of Halifax, pays 4.05 per cent [more details] and Santander 4 per cent for two years [more details]. The best three-year deal comes from Halifax at 4.25 per cent [more details].

What you need to open an Isa

When you open a cash Isa, you need your national insurance number. On branch-based accounts, take along proof of who you are (passport or driving licence, and some accept a letter from the government about your state pension) and where you live (a gas or electricity bill not more than three months old or a council tax bill no more than a year old).

Make sure you move your money when your fixed-rate deal comes to an end or you could find you are earning just 0.1 per cent on your money.

Check the rate on any variable rate cash Isa you took out last year. If it was one of the top payers, it more than likely paid a first-year bonus. After 12 months, your rate could drop sharply.

For example, a year ago Halifax Isa Direct Reward paid 3 per cent to new savers, but after a year the rate plummets to 0.5 per cent. Santander Flexible Isa 3 offered 3.3 per cent, but unless you have more than £8,500 in your account you would end up earning 0.5 per cent after a year.

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