ISA Rates Continue To Fall | moneyfacts.co.uk

Moneyfacts.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfacts.co.uk will always be from news@moneyfacts-news.co.uk. Be Scamsmart.


Derin Clark

Derin Clark

Online Reporter
Published: 19/04/2021

Normally as we enter the final two weeks of April ISA savers will have been able to capitalise on saving providers offering new, competitive ISA rates. This year, however, has not only seen savers struggling to find competitive ISA deals, but our research has found that month-on-month average ISA rates have continued to fall, along with the number of deals available. As such, now might be the perfect opportunity for savers to re-evaluate how they save and consider alternative options.

Research carried out by Moneyfacts and due to be published in the Moneyfacts UK Savings Trends Treasury Report found that between the 1 March and 1 April 2021, the number of ISAs available fell by 30, from 331 to 301. During this period, the average rates on easy access, one year and longer term (550 days+) ISAs all fell*, with the average easy access ISA rate falling from 0.23% to 0.22%, the one year ISA average rate falling from 0.38% to 0.36% and the average longer term ISA rate falling from 0.59% to 0.57%.

“Savers may have hoped to see some competition this time of year as but it’s clear that they have had a disappointing ISA season,” explained Rachel Springall, finance expert at Moneyfacts.co.uk. “As the choice of cash ISAs fell to their lowest levels in over four years and rates stand at record lows, it would not be too surprising to see savers re-evaluate their attitude to risk and seek alternative ways to invest, such with a stocks and shares ISA.”

What alternative options are available to ISA savers?

One option available to ISA savers who want to continue with a cash ISA is to consider an often less-familiar challenger bank. Although these banks are normally not household names, they regularly offer the most competitive rates in the charts. Springall explained: “If searching for the best deals, challenger banks continue to offer some of the top rates, however, the top rate tables remain volatile so quickness to apply remains crucial to not be left disappointed.”

Alternatively, ISA savers willing to take a risker option and who are looking for a long-term option can consider a stocks and shares ISA. Stocks and share ISAs allow consumers to invest in traditional stocks and shares, but as they are a type of ISA, investors benefit from the £20,000 tax-free allowance for the 2021/22 tax year. Investing in a stocks and shares ISA can be done through an investment platform, such as interactive investor , which allow investors to select and manage their investments easily in one place. Our guide on investment platforms provides more information about investing this way; alternatively, those interested in a stocks and shares ISA should visit our stocks and shares ISA chart to see what platforms are available.

Watch out for scams

As average ISA rates remain at record lows, ISA savers may be tempted by adverts offering slightly higher rates than those topping the Moneyfacts.co.uk ISA charts. Savers considering adverts for products not included on the Moneyfacts.co.uk chart should consider the product carefully to make sure it is not a scam.

Fraudsters will often advertise attractive rates that are slightly higher than the top rate available, but not too high so that it arouses suspicion to attract potential victims. The adverts can be used to advertise both cash ISAs and investment ISAs and sometimes the offer seems so genuine that consumers are unaware they have been scammed until they look to withdraw their money or fail to get the expected interest.

One way of avoiding a scam is to click through to providers using links on trusted websites such as those available in the Moneyfacts.co.uk charts. As well as this, consumers should also check a provider is authorised by the Financial Conduct Authority (FCA) by checking the FCA register. Consumers should also be cautious of any unsolicited phone calls, emails or text messages they receive offering products or investments. For more information about the different types of scams operating and how to stay protected against scams, read our story on how to avoid investment scams.

 

* Average interest rates based on a £5,000 deposit as at the start of the month.

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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. 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.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy