The cash ISA season is well underway, with the battle of the best buy tables continuing unabated.
But those loyal savers who have stuck with their high street banks are missing out on valuable tax-free interest, compared with the best deals on the market.
Although the cash ISA rates on offer from the UK's biggest banks generally pay higher rates than their non-ISA equivalents, they still pale into insignificance when compared to the best on the market.
For example, Santander’s Easy ISA is paying just 0.10%, whilst Shawbrook Bank, Easy Access Cash ISA - Issue 2 is paying 1.25% - 12.5 times more. And those who are unlikely to make many withdrawals could earn even more if they are happy to be restricted to just one withdrawal a year - Nationwide’s Single Access ISA is paying 1.30%
Savers who fail to move their money from these accounts are allowing themselves to be robbed, as they are missing out on additional tax-free interest, compared to the top-paying accounts.
A general malaise has spread across the savings market because of the continual low rates of interest available. But savers need to realise that the high street banks are using this to offer them much lower rates than they can get elsewhere, because of the feeling that ‘there is not much to be gained by switching’.
But that is most definitely not the case. Our analysis shows that by moving from some of the lowest paying accounts with the likes of Santander, to the top-paying account without any access restrictions (Shawbrook Bank 1.25% tax free/AER) you can earn 12.5 times more in interest each year. On a deposit of £20,000, that is the difference of earning either £20 a year or £250 a year in tax-free interest.