Fixing your ISA rate - is it the best option this year?

Andrew Hagger of Moneynet.co.uk looks at the latest moves in the ISA market.

The ISA season is now pretty much in full swing, as providers battle it out for precious best buy positions.

With a base rate increase or two looking increasingly likely during 2011 consumers may find that opting for a variable rate ISA could turn out to be a more rewarding strategy this year.

The best 1 year fixed rate bond priced at 3.20% from Barnsley Building Society pips the best variable rate deal from Santander at 3.15%, however if you factor in a potential quarter point base rate increase here and there in the next 12 months, then variable looks the way to go.

Most of the big guns have revealed their latest ISA products, although at the time of writing, we are still awaiting the details of the new Barclays deal.

The Santander ISA is linked to base rate (+2.65%) so any increases should be passed on to the customer in full, however once again the Santander offering will disappoint those looking to switch existing ISA funds as the account is restricted to new monies only.

The Halifax direct reward ISA looks a good option at the moment - it pays 3.00% (3.20% for Halifax current account customers), allows transfers in, unlimited penalty free withdrawals, plus Halifax (along with Lloyds TSB and Nationwide BS) offers customers interest from the day their signed application is received if they are switching ISA monies from elsewhere.

With savings rates offering poor returns and rising inflation making life a misery for savers, protecting your nest egg from the taxman becomes even more important.