Cash ISA providers hike rates ahead of tax year end
Data from Moneyfacts showed 22 providers have increased or launched new deals this month. Overall, interest rates across the savings market have risen for 14 consecutive months, with the number of rises continuing to outweigh cuts (126 rate rises versus 46 rate cuts in February).
However, savers’ cash continues to be eaten away by inflation. There is not one single standard savings account that can beat or even match today’s inflation figure of 2.7%. In contrast, the average stocks and shares ISA returned growth of 4.26% over the past year, according to Lipper data.
Rachel Springall, finance expert at Moneyfacts, said: “It’s clear to see that providers have been gearing up for ISA season this year, as there has been a decent amount of rate rises and a much-welcomed improvement to the best buy tables. A word of warning to savers, though: don’t expect the top rates to be around for too long if you are looking to grab an ISA before the tax-year ends.
“Savers who are eyeing-up ISAs will be pleased to see that over 20 providers have made a move by increasing rates, including big brands such as Nationwide, which launched a table-topping 1.30% on their easy access ISA. But still, with inflation sitting at 2.7%, savers’ cash is being eroded in real terms. In comparison to last year, savers would have found it difficult to get 1% on an easy access ISA.”
Springall said the ISA market has faced criticism over the years because of the rate gap. However, she added that cash ISAs have also been overlooked because of the government’s introduction of the Personal Savings Allowance (PSA), which also offers tax-free returns.
|20 Mar 2018 – best easy access ISAs||20 Mar 2017 – best easy access ISAs|
|Provider||Gross rate at £10k||Provider||Gross rate at £10k|
|Nationwide BS||1.30%||Virgin Money||1.01%|
|Al Rayan Bank||1.22%||Skipton BS||0.90%|
|Virgin Money||1.21%||Post Office Money®||0.90%|
|Nottingham BS||1.20%||Coventry BS||0.90%|