Have you ever heard the phrase ‘ISA season’ and wondered what it was? If so, you are not alone. ISA season is often talked about in the financial press, especially in March and April, with statements declaring you should use it or lose it. But what does that really mean and why is this time important for savers? Here we provide a complete overview of what ISA season is and why it matters for your savings.
An ISA is a type of savings account that allows savers to deposit up to £20,000 tax-free in the current tax year. The ISA season is traditionally in March and April each year; aligned to one tax-year finishing and a new one starting on 6 April.
Usually rates do increase during ISA season as providers seek to attract savers who have not yet opened an ISA by the end of the tax year or to encourage early savers at the beginning of the new tax year. However, the level of increase and the timing of these is not consistent or guaranteed.
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Historically the best ISA rates have been available during ISA season and then normally by the end of April or in May ISA rates fall again. Saying this, in the past there have been times when unusual activity within the ISA market has taken place, for example providers introducing new competitive rates several months after the end of ISA season. As well as this, on a yearly basis ISA rates tend to peak again in the autumn – a period that has become known as a second ISA season. This means that although savers can expect to get highly competitive rates during ISA season, they should remain vigilant throughout the year as providers do not just wait until the end and start of the tax year to release highly competitive rates.
Those looking to capitalise on the increase in rates during ISA season would be advised to open an account at the start of the tax year, as this will enable them to benefit from the higher rate throughout the year even if they deposit no more money into the account for the further 12 months. In addition to this, if you have a current ISA and you see a provider offering a higher rate during ISA season, you can capitalise on this by opening the new ISA account and transferring the money from your old ISA to your new one. Before you do this however, be careful to check for any transfer out penalties from your existing ISA and that your new ISA allows transfers from existing accounts.
While ISA season usually offers the best rates, competitive rates can often be found throughout the year and you can view our ISA chart to see the current rates available.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.