Which? is urging the thousands of people with bonus paying cash Isas that are due to end, to switch to a better rate account. If you still haven’t made use of your 2011/12 Isa allowance, move fast – there are only 5 days left.
Savers who fail to move their money could collectively lose millions of pounds in interest and bonuses by sticking with their current provider.
Based on the current maximum tax free allowance of £5,340, those people who don’t move their money once the bonus period has ended on their account will lose £85 on average this coming year. For savers with twice this amount in the bank, the interest they lose could add up to over £171.
Consumers who put their savings in Santander’s Flexible ISA Issue 3 last April will see the rate drop from 3.3% to just 0.5%. The Halifax ISA Direct Reward will also drop from 3.0% to 0.5%. That would mean just £5 in interest for every £1,000 you have in the account.
There are some clear incentives to switching and many banks have increased their top paying interest rates for 2012. However, before transferring, consumers should compare accounts and work out which provider will offer them the best rate. If the best-paying accounts come with a big bonus, people must be vigilant and switch before their interest rate, and potential earnings, plummet.
Which? executive director, Richard Lloyd, says:
“If there’s only one thing that people do about their finances this weekend, it should be to look at whether they would be better off by moving their money to a new account. Compare different accounts before making any decisions and use Which?’s online savings rate booster to help you work out where to get the best rate.
“Cash Isas should give people a real incentive to save and we’re calling on the banks to play fair and pay at least as much on their cash Isas as their equivalent standard savings accounts after tax.”
Notes to Editor
1. For further information on Which?’s free savings rate booster tool see:
2. Which? compared all instant access cash Isa accounts that were available in April 2011 and included a 12-month bonus. We then worked out the go to rate (rate once the bonus period ends) and have calculated the interest on £5,340 (maximum Isa allowance) that you would lose out on if you leave the amount in the account for a year after the bonus period ends.
Which? also compared the average rates on Isas available one year ago compared with today.
3. People have until 5 April to make use of the 2011/12 Isa allowance if they haven’t done so already.
4. The allowance for 2012/13 has increased to £5,640