Millions of Britons are potentially missing out on hundreds of pounds extra income a year because their cash ISA savings are in accounts paying 1.50 percent interest or less, according to new research.
The analysis from Yorkshire Building Society and CACI shows this is impacting a staggering five million instant access cash ISA accounts with an average balance of over £8,500.
The analysis is in addition to that highlighted earlier in the year showing almost £400billion is being held in current and savings accounts earning one percent interest or less, meaning millions are losing out on additional income.
Chris Irwin, director of savings at Yorkshire Building Society, commented: “It’s surprising to see such a large amount sitting in low-paying ISA accounts after a period of significant increases to savings interest in the last two years.
“This data follows on from our analysis earlier in the year calling for consumers to take time to review their finances.
“The start of a new financial year gives the perfect opportunity to review finances and make the switch from low-paying accounts. It’s important savers take action and think about how they can make their hard-earned cash go as far as possible.”
Rachel Springall, finance expert at Moneyfacts, added: “This research emphasises why consumers need to regularly check the rate they earn against the market and not presume they are getting a decent return.
“It is wise to make a diary note to proactively review and switch existing ISA pots to keep their tax-free wrapper and chase better returns. Leaving Cash ISAs unchecked or becoming apathetic can be costly, as savers may miss out on a better rate without realising it.”
Top easy access Cash ISAs today
Cash ISAs are a popular savings option, as these accounts enable people’s money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA). Easy access accounts typically offer savers more flexibility to dip into their pots, which can be helpful during the current period of high living costs.
For those who need instant access to their cash ISA, Plum is taking the top spot with an Annual Equivalent Rate (AER) of 5.17 percent off a £100 deposit.
The interest rate includes a 0.86 percent bonus for 12 months. Interest is paid monthly and up to three withdrawals are permitted without facing a lower interest rate.
Moneybox places just behind with an AER of 5.16 percent. The rate includes a 0.91 percent bonus for 12 months and savers need a minimum deposit of £500 to launch the account.
Up to three withdrawals are permitted per year without impacting the interest rate. On the fourth withdrawal, the rate will drop to 0.75 percent. Interest is paid on the anniversary.
For those looking for more flexibility, Chip is offering an AER of 5.1 percent with unlimited withdrawals. Savers need just £1 to launch an account and interest is paid monthly.
Zopa’s Smart Saver offers an AER of 5.08 percent and can be opened with a minimum of £1. Interest is paid monthly and withdrawals are permitted at any time.
Fifth on the list is Cynergy Bank’s Online ISA (Issue 44) with an AER of five percent. Savers need a minimum deposit of £1 and interest is paid yearly.
