Time is running out for thousands of people with bonus paying cash Isas to make use of their tax free allowance and switch to better paying accounts.
Which? is urging savers to take some time this weekend to find the best cash Isa deals as we estimate those who fail to move their money could collectively lose millions of pounds in interest and bonuses by sticking with their current provider.
You have until 5 April to make use of your 2011/2012 Isa allowance if you haven’t already done so.
Cash Isas – Don’t miss out
Based on the current maximum tax free allowance of £5,340, 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 more than £171 – the same price as a Which? Best Buy SatNav.
This year the interest rate on Santander’s Flexible ISA Issue 3 will 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.
Savings rate booster
Which? executive director Richard Lloyd said: ‘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 into 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.’
Shop around before you switch
There are some clear incentives to switching. Many banks have increased their top paying interest rates for 2012. AA has increased the rate on its Internet Access Isa from 3.35% to 3.50%.
However, before switching people should compare accounts and work out which provider will offer them the best rate. Savers shouldn’t always assume that a cash Isa will get them a better deal as some banks pay more interest after tax on their standard savings accounts.