New Which? research reveals the savings providers who are reducing rates on variable rate cash ISAs, undermining the Government’s recent ISA reforms.
- On 1st July, Harpenden Building Society cut the rate on its Simply ISA by 0.75%, from 2.25% to 1.5%, Cambridge Building Society reduced the rate on its Instant Access ISA for savings of £10,000 from 1.3% to 0.70% and Tesco Bank’s ISA standard rate fell by 0.5% from 1.75% to 1.25% (although it will pay a 0.5% bonus for six months).
- A further 10 providers have already cut their rates or are planning to: seven by 0.25%, two by 0.20% and one by 0.05%.
- Just four providers have increased rates on variable rate cash ISAs. BM Savings’ ISA Extra is up from 1.25% to 1.55% (including at 12-month 1.05% bonus), making it the top-paying instant access ISA alongside KRBS.
- Halifax, Sainsbury’s Bank and Virgin Money have also boosted rates by 0.20%, 0.10% and 0.15% respectively.
Which? executive director, Richard Lloyd, said:
“By cutting rates, banks and building societies are undermining the benefits of the Government’s ISA reforms. We want providers to scrap the savings trap and help their customers make the most of their money. That includes being crystal clear about interest rates, notifying people of the end of bonus and fixed-rate deals and making ISA switching easier.”
1. Methodology on research: Which? contacted all instant access cash ISA providers in June 2014 and asked them if they were planning any rate cuts in the lead-up to the launch of the NISA.
2. Which? is calling on banks and building societies to ‘Scrap the Savings Trap’:
Don’t leave customers languishing in sub-standard savings accounts – close ‘zombie’ accounts and move people’s money into one default easy-access or ISA account at the end of fixed terms.
Stop making ISA switching complicated and laborious – make switching quicker and stop limiting transfers into new ISAs.
Don’t leave customers in the dark about the best return on their savings – display interest rates prominently and consistently on all statements, annual summaries and online pages, improve notifications about the end of bonus rates or fixed terms, and ensure better offers are promoted by staff and in statements.
Press Release: Personal Finance