ISAs continue to catch the imagination - Savings - News - Moneyfacts

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ISAs continue to catch the imagination

ISAs continue to catch the imagination

Category: Savings

Updated: 01/07/2010
First Published: 01/07/2010

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 It is now over 6 months old so the content may be out of date.
Savers flocked to ISAs over the first five months of the year, meaning the accounts attracted record amounts of money during the period.

ISA sales amounted to £503 million in May, the highest figure seen in the month since 2000, figures from the Investment Management Association have revealed.

A record May takes the total invested into the tax free accounts to £2.8 billion since January, the highest total seen in the period since 2001.

The ISA season was a particularly busy one this year, with providers launching competitive new accounts earlier than is usually the case.

The low interest rate environment has meant that savers have had to work harder to find a good rate for their money, while the effects of high inflation have highlighted the importance of the tax free element that ISAs offer.

"It is encouraging to see that ISA sales have held their own during these unsettling times and that these accounts have continued to be considered as the starting point of a portfolio for most savers," commented Darren Cook, spokesperson for Moneyfacts.co.uk.

"Sales figures are the highest for any month of May since 2000 when the average rate for an instant access ISA was 6.34%. Unfortunately, this average rate has now fallen to a disappointing 1.31%.

"However, even though savers are currently being offered abysmal rates, it seems they are making a worthwhile and prudent choice by ring-fencing capital to keep interest from the taxman. It is also worth remembering that rates will not be at historical lows forever."

Savers that are yet to take advantage of their 2010/11 ISA allowance still have the chance to do so.

Nationwide's ISA offers a rate of 2.75% (including a 1.00% bonus for 12 months) on a minimum investment of just £1, while Birmingham Midshires' ISA boasts a rate of 2.70% (bonus of 1.00% for 15 months) on a minimum investment of £500.

Those looking for a variable rate may be tempted by Halifax's 2.60% rate, which includes a variable bonus of 2.10% for 12 months. This account requires a minimum investment of £1,000.

Find the best savings rates for you - Compare savings accounts

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.

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