Tesco Bank has announced an interest rate rise for its popular Instant Access Cash ISA, giving millions of savers the chance to boost their tax-free returns. The rate has increased from 3.91% to 3.97%, and the offer applies to both new and existing customers. The change, effective from February 24, comes at a time when many savers are searching for the best deals before the end of the financial year.

Cash ISAs allow people to save up to £20,000 each tax year without paying tax on the interest, and many banks, including Tesco Bank, let customers open an account with as little as £1. Instant access also means savings can be withdrawn at any time. Tesco Bank says interest in Cash ISAs is rising ahead of the cash ISA limit reducing in April 2027.

New research commissioned by the bank found that 41% of ISA savers are actively looking for better rates to help grow their savings over the next year.

The same research shows that 80% of Cash ISA holders have not yet used up their full allowance for the current financial year.

Announcing the rate rise, Chris Henderson, save and pay director at Tesco Bank, said: “Cash ISAs are a savvy way to build up your savings over time, while benefitting from the tax advantages they offer.

“At a time when we know people will be shopping around in the next few weeks to boost their savings before the start of April, we’re pleased to offer both new and existing customers an increased rate on our Instant Access Cash ISA.”

The new 3.97% rate includes a guaranteed fixed bonus of 2.92% for the first 12 months, combined with the bank’s standard variable rate of 1.05%.

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After one year, customers will continue to receive the standard variable rate.

Tesco Bank says the structure ensures customers receive a competitive return from the day they open their account.

The research, which was part of the announcement, was carried out by Opinium, who surveyed 2,200 UK adults between January 27 and January 30, 2026. Of those surveyed, 1,304 people held at least one Cash ISA.

Tesco Bank has grown significantly since it was first established in 1997, and today helps around 3.8 million customers manage their money.

Its products and services, now delivered through a long-term strategic partnership with Barclays, are designed to make banking simpler while rewarding customer loyalty through Clubcard.

Charter Savings Bank – 4.11%

Charter Savings Bank currently offers 4.11% on its Cash ISA. It can be opened online from £1, allows transfers in and pays interest monthly, though it is not a flexible ISA.

Leeds Building Society – 3.96%

Leeds Building Society pays 3.96% on a two-year Cash ISA with a variable rate that can change over time. It requires a minimum deposit of £1,000, allows transfers in and pays interest annually, but is not a flexible ISA.

Bank of Ireland UK – 3.95%

Bank of Ireland UK offers 3.95%, made up of a 0.9% variable rate plus a one-year 3.05% bonus. The rate falls after the first year, and the account can be opened online with a £100 minimum, allowing transfers in and paying interest annually.

Skipton Building Society – 3.92%

Skipton Building Society pays 3.92% and offers one of the few flexible ISAs available. It can be opened with just £1 online, through the app, by phone, post or in branch, and pays interest annually.