It's been a while, but there is finally some good ISA news to report again, as the number of ISA products and average ISA rates have both increased for the second month in a row. This is the first time such increases have been recorded at the start of the ISA season since the Funding for Lending Scheme (FLS) was launched in 2012.
Traditionally, ISA season has begun a few months before the end of the tax year in April, as providers try to tempt people into using up their ISA allowance for the year before it's too late. However, over the last few years, ISA rates have taken a hit and ISA seasons have become virtually non-existent as a result.
That is, until this year, with the 0.10% increase in the average no notice ISA rate from December to February certainly pointing in the right direction, no doubt thanks in part to the end of the FLS. Charlotte Nelson, finance expert at Moneyfacts, further explains that figures from the upcoming Moneyfacts UK Savings Trends Treasury Report show the highest return on fixed rate ISAs since April 2017.
|Average No Notice ISA||1.46%||0.64%||0.68%||0.78%|
|Average Long-term Fixed Rate ISA||2.14%||1.01%||1.38%||1.46%|
Source: Moneyfacts Treasury Reports
However, she also warns that "ISA savers will be disappointed to find that while we have seen an upturn in rates, ISA returns have yet to recover from the base rate cut in 2016. [Yet] with multiple base rate rises now on the horizon, it is important that savers think about using their ISA allowance. As rates rise, some savers could find themselves having to paying tax on the interest earnt on their non-ISA accounts. If savers don't use their tax-free allowance, they might lose tax advantages which they may need in the future."
Have a look at the ISA charts to see if there's an account worth your investment – you have until 5 April 2018 to invest this year's ISA allowance of £20,000
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 Any products featured may be withdrawn by their provider or changed at any time.