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Two-thirds haven’t used their ISA allowance this year

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Only a third (34%) of the UK has used an ISA product over the past 12 months, with around half of savers believing they don’t have enough money to make it worth it.

There are converts, however, with almost two in five (39%) believing that ISAs allow them to get the most out of their money, and one in eight (13%) plan to use their full ISA allowance of £20,000 by the end of the financial year.

In spite of the wide choice of ISAs on offer, the majority of investors – 62% – still only use one product to save. For most, the biggest problem is the complexity involved in managing multiple products with different providers. Around two-thirds would like to see a ‘portfolio ISA’, which makes the process of handling multiple cash ISAs easier.

More difficult has been the combination of cash and stocks and shares ISAs. Although many platform providers have a ‘cash park’ facility on their ISA accounts, they usually pay no interest and are only designed as a way to hold cash temporarily before investment.

Ewan Edwards, head of savings at Aldermore, said: “It is evident that there is still a lack of understanding around the importance of ISAs and the benefits this savings product provides…We encourage people to explore the different products on the market to make the most of the tax-free ISA allowances. We have seen from the research that the majority (62%) of those with an ISA only stick to one product, when in fact they could reap the rewards of an ISA portfolio manager which makes the most of a range of cash ISA products.”

Aldermore’s saving tips:

  1. Shop around to find the best ISAs on offer – there are still a number of good options on the market despite the low interest rate environment
  2. Set aside a regular payment to your savings account at the start of every month
  3. Use the personal ISA limit – this is tax-free so make your savings work even harder
  4. Set a short and long-term savings goal to work towards
  5. Always track your spending and monitor budgets.

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