Savers scouring the market for a cash Isa will find the biggest month-on-month jump in the rates on offer in a decade, according to analysis.
The average easy access Isa rate in April is 0.38% – up from 0.30% in March – Moneyfacts.co.uk found.
The financial information website said the 0.08 percentage point increase is the biggest monthly rise for this type of account since April 2012.
Someone saving £5,000 into an easy access cash Isa could typically make £15 in interest over a year if they do not dip into the pot based on March’s average annual rate, increasing to £19 based on April’s average rate.
The average easy access cash Isa rate is the best it has been since June 2020, when it was 0.45%, Moneyfacts said.
The average one-year fixed Isa meanwhile recorded the biggest month-on-month rate increase since August 2011, rising to 0.87%, its highest point since May 2020 when it stood at 0.91%.
Those savers who are comparing deals to utilise their 2022/23 allowance will find much better rates on average compared to a month ago
Rachel Springall, Moneyfacts.co.uk
Longer-term fixed Isa rates, with terms of more than 550 days, have also jumped up.
The average long-term fixed Isa rate is now 1.30%, up from 1.12% in March.
It marked the biggest month-on-month rise since July 2008 and the highest average rate for this type of account since February 2020, when it was 1.34%.
The analysis was based on someone having a £5,000 savings deposit.
The period around March and April is often known as “Isa season” as providers compete to attract customers with their best rates. Savers receive a fresh Isa allowance each tax year, which runs from April 6 to April 5.
But in recent years competition has been lacklustre in the low interest rate environment.
Rachel Springall, finance expert at Moneyfacts, said: “After a lengthy absence, Isa season is back around the end of a tax year, with the market seeing the highest uplift in average rates month on month in a decade.
“Those savers who are comparing deals to utilise their 2022/23 allowance will find much better rates on average compared to a month ago, both for variable and fixed Isas.
“The improvement to the market over the past year is positive as it’s worth noting that rates fell to record lows in 2021.
“Compared to a year ago, both the average one-year fixed Isa and longer-term fixed Isa rates have more than doubled.
“Encouragingly for savers, both competition and the recent back-to-back Bank of England base rate rises are elevating interest rates across the savings spectrum.
“The rate war that has raged within the top rate tables for both fixed bonds and Isas month on month will be positive news for savers who want to lock their cash away for a higher return than they could receive on a variable rate.
“However, whether someone is comfortable to invest longer term with rising interest rates remains to be seen.”
Ms Springall continued: “As interest rates rise, savers may well wish to keep their money close to hand so they can switch quickly for a higher return…
“In the months to come, providers may well improve rates further, and we are already seeing competition return to this sector from challenger banks, some of which are paying 1% or more.”
She added: “Keeping a close eye on the market is crucial both for savers to secure a top rate, and for savings providers to keep ahead of the competition.”
Moneyfacts also found that the choice of Isas has broadened out, with 112 more deals available than a year ago.
The website counted 413 cash Isa products to choose from – the first time the total has topped 400 since around the start of the UK coronavirus lockdowns in March 2020.