🔔 Inactive savers missing out on £hundreds of valuable tax-free interest!

The amount of money being saved into cash ISAs has been falling as savers question their value.

But with the rates of best buy easy access cash ISAs increasing by more than any other type of savings account over the last 12 months, savers could end up missing out on valuable tax-free interest by shunning this stalwart of the savings market.

But simply choosing the best rate may not be the best solution to your savings strategy.

Saving money into cash is no longer simple – more and more easy access accounts and easy access cash ISAs include bonuses or restricted withdrawals, which can lead to unwitting savers languishing in an account paying a really poor rate of interest.

In January 2016, the Post Office Savings Online ISA Easy Access Issue 3 was paying a market-leading rate of 1.51% tax free/AER - which included a variable rate bonus of 0.86% for 12 months. Today, savers who have not moved their cash from this account are earning just 0.50%.

The best simple cash ISA back then was the Coventry Building Society Easy Access ISA, which was paying 1.50% tax free/AER - today this account is still paying a competitive 1.25%.

If you deposited the then cash ISA allowance of £15,240 into the Post Office option and failed to move it, your £15,240 would today have grown to approximately £15,548. If you have chosen the simple option with Coventry, you would have earned over £300 more in interest as your £15,240 would now be worth approximately £15,851 – nearly 2% more over the last three years.

We all know that most savers would prefer not to have to keep switching their savings, so these simple accounts are popular, as hopefully they will reward savers for being loyal.

Of course, it’s still important to pick wisely as some providers are more generous than others. For example, NatWest’s simple Cash ISA is currently paying 0.35% on a balance of £20,000, compared to Paragon who is offering the best simple cash ISA rate of 1.45%. On a balance on £20,000, that is the difference of earning £70 over 12 months or £290.

And it’s also important to keep an eye on the rate to make sure that it doesn’t simply dwindle over the years and become uncompetitive – if it does, that is the time to switch.

This is particularly important for cash ISAs, as they should be the last easy access accounts to be drawn from as, once the money has been withdrawn, it often needs to be replaced within the same tax year or the tax-free allowance will be lost forever.

Current top five simple easy access cash ISAs

Rates correct at 22/01/2019

Best Buy rate increases Jan - 2018 - Jan 2019

Source: Savings Champion

If you need any help with finding the accounts that are most suitable for your needs, please call us on 0800 011 9705 to speak to one of our expert savings specialists.

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