Product choice and rates slashed in ISA market - ISAs - News - Moneyfacts

News

Product choice and rates slashed in ISA market

Product choice and rates slashed in ISA market

Category: ISAs

Updated: 23/04/2013
First Published: 23/04/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Research by Moneyfacts.co.uk has revealed a dramatic drop in the number of cash ISA products and average rates available today compared with this time last year.

A total of 325 variable and fixed-rate cash ISA deals are currently offered compared with 420 in April 2012. At the height of the ISA season in March 2013, ISA numbers peaked at just 334, 17% less than the same month last year.

Rates this ISA season have also proved disappointing, with the average long-term fixed-rate ISA standing at 2.41% today. Often considered to be a safe bet in achieving a decent tax-free return, this average stood at a much healthier 3.58% in April last year.

Sylvia Waycot, Editor at Moneyfacts.co.uk, believes the Government's Funding for Lending Scheme is to blame for such low rates and poor choice in the tax-free savings sector.

"Up until recently, ISA season was a sure bet," she said. "There would be a glut of new products, a mini interest rate war and an enormous amount of marketing bestowing the virtues of putting your money into an ISA, but not this year.

"As a knock-on effect to the Government's Funding for Lending Scheme, providers simply don't need savers money in order to lend, and lengthening the project is only going to lengthen savers' pain.

"Savers may be forgiven for wondering "what is the point?", but it is important, if you have the means, that you do use up all of your ISA allowance each year. If you don't and suddenly things get better, you won't be able to reclaim any unused allowance from missed years.

"If Funding for Lending grows, then the unpalatable truth is that savings rates will also stay low and savers will need to combat this by being vigilant for not only the best rates, but ensuring they get the best from the account by understanding the many conditions that can apply," she warned.

What next?

Variable rate cash ISAs
1 year fixed rate cash ISAs
2 year fixed rate cash ISAs
3 to 5 year fixed rate cash ISAs

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

All ISA rates fall below 1.00%

It can’t be denied that the ISA sector has had a tough time of late, and it's taken a significant toll, with our latest figures showing that all average ISA rates have fallen below 1.00% for the first time on record.

Top 6 inflation-beating cash ISAs

Inflation took an unexpected dip in October, official figures have revealed, with the measure of CPI standing at 0.9% (down from 1% in September).

6 of the best variable cash ISAs

The announcement of a flexible ISA came as welcome news this week: soon, savers will be able to withdraw cash and put it back in later...
 
Close