Savers are being urged to take advantage of strong competition for cash Isas, which has pushed tax-free rates as high as 6.5 per cent.

Experts said it is worth taking up unused 2008/9 Isa allowances now rather than waiting until later in the tax year, and transferring existing individual savings accounts to take advantage of better deals. Some savers could earn hundreds of pounds of extra interest from transferring accumulated Isa balances.