The amount of money people are stashing away in ISAs is falling dramatically, with savers apparently waiting to see what new rates and products will be launched when NISA changes come into force in July.
According to Bank of England figures, the amount Brits put away in April fell at the fastest monthly rate since the accounts were launched in 1999, clearly suggesting that savers are reluctant to tie their cash up until they get a better understanding of what the future landscape will be.
Deposits fell by a whopping £2.8 billion in April to total £226 billion over the month, a surprising turnaround considering that monthly deposits had been on a general upwards trend since the financial crisis and had reached almost £230 billion – and it's even more surprising given that April is traditionally the most popular month for deposits.
There are other factors that could come into play as well, namely that since ISA rates have fallen so much over the last few years, a lot of savers could be looking for alternatives. High-interest current accounts, for example, can offer as much as 5% interest up to certain amounts – compared to the average no notice ISA which offers just 1.48% – which could prove to be attractive for those looking to source the best returns.
However, it's hoped that ISA subscription levels could return to form once the new rules announced in the 2014 Budget have come into effect. As of 1 July savers will get the chance to deposit up to £15,000 into a NISA in the 2014/15 tax year, meaning many could simply be delaying their investment decisions until that point.
In the meantime, however, it doesn't hurt to consider your options. By waiting to save until July you're effectively missing out on a month or two of tax-free interest, and even on the current ISA limit it could soon add up. And, as long as you make sure your chosen account either offers top-ups or penalty-free transfers should you find a better rate there'll be nothing to stop you from getting the best possible return from your new £15,000 limit, so start your search to see if you could find a decent home for your money and maximise your tax efficiency.
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