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ISA rush sees savings levels rise

ISA rush sees savings levels rise

Category: Savings

Updated: 22/09/2011
First Published: 01/06/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

People have responded to a spring launch of competitive ISA accounts by increasing the amount they are saving.

Figures from the Building Societies Association (BSA) show that savings into cash ISA accounts totalled some £1.37 billion in April, more than double the £668 million that was placed in cash ISA accounts in the same month last year.

A number of attractive cash ISAs were launched this ISA season and savers were quick to take advantage of their annual allowance, which has climbed to £5,340 for the 2011/12 tax year.

Cash ISAs are a great way to save as they shelter your interest from the tax man, making them one of the most efficient ways to save.

If you've not dipped your toe into the ISA waters previously, a one year account with a great rate might be the best place to begin.

A good example of such a cash ISA is the Nationwide BS e-ISA which is operated online and offers an outstanding rate of 3.10%.

For those who would prefer to let their money mature for longer, the Chelsea BS 2 year e-ISA offers a highly competitive 3.50%.

While people are still turning to their savings accounts when times get tough, they are saving far more than they are withdrawing.

Discounting all withdrawals, savers deposited a combined £983 million into savings accounts in April, well up on the net figure of £537 million in April 2010.

"Mutuals had a significant inflow of funds into savings accounts during April which was helped by particularly strong deposits into ISA accounts compared to April last year" commented Adrian Coles, director-general of the BSA.

"However, it will be difficult for deposit takers to maintain a positive inflow of funds this year given the squeeze on household finances.

"The added competition from state-backed NS&I could also make attracting funds more challenging."

For a full run down of the savings market's finest cash ISAs, as well as stocks and shares ISAs, check the Moneyfacts Best Buy tables.

Looking for a Cash ISA - Compare cash isa rates and best isa rates for transfers

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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.