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Savers forgoing half a billion in interest

Savers forgoing half a billion in interest

Category: Savings

Updated: 12/03/2012
First Published: 12/03/2012

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 It is now over 6 months old so the content may be out of date.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 are forgoing half a billion pounds in interest each year by not fully utilising their ISA allowances.

In the current tax year ending on April 5, savers are allowed to put away £5,340 into a cash ISA, but the average amount falls well short of the maximum.

There are currently 12 million cash ISA subscribers with an average subscription of £3,190 – a shortfall of £2,150.

And Nationwide says this is costing cash ISA savers around £500 million in extra interest each year.

With providers competing for savers' interest, there are a number of cash ISAs with eye-catching rates of interest.

Unlike traditional savings accounts, cash ISAs are tax free, meaning all the interest goes to the account holder, making them one of the most tax-efficient ways to save.

"ISAs are an absolutely great thing," commented Richard Marriot, head of savings at Nationwide.

"For savers, they're fantastic because you get all of the interest you earn on your savings account. On most savings accounts, you have to pay tax on the interest, but you get to keep it all in an ISA.

"Our research shows that savers are losing out on more than half a billion pounds of interest per year - that's an enormous amount of money and it works out at £50 per person.

"People should really maximise the amount they save in an ISA if you can. You should also remember that each ISA limit is an annual limit; if you don't use it, you lose it."

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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 Any products featured may be withdrawn by their provider or changed at any time.

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