You are here: Home - Saving & Banking - News -

80% of savers favour cash ISAs

Written by:
Interest rates are at record lows but Brits are still opting to save their hard-earned money in cash ISAs.

Latest figures from HM Revenue & Customs (HMRC) show 80% of the 12.7 million adult ISA accounts opened in the 2015/16 tax year were cash ISAs, which was “broadly static” with the previous year.

Around £80bn was subscribed to adult ISAs in 2015/16, with just over 20% going into stocks and shares ISAs.

Investment firm Royal London said the figures “reinforce the concern that investors are holding excessive amounts in accounts with low interest rates which deliver negative real returns once account is taken of inflation”.

Currently no cash ISA product pays a rate that beats or matches inflation.

The best savers can get is 1.75% on a five-year fixed-rate ISA from Paragon Bank.

Royal London said investors have missed out on £100bn in returns over the last decade by staying in low-return cash ISAs rather than investing in a diversified stocks and shares ISA.

The HMRC figures show lower income and younger investors are more likely to favour cash.

In 2014/15, all income groups earning less than £30,000 a year were more likely to hold their ISA savings in cash-only products, whereas the reverse was true for those earning more than £30,000.

And of the £971m put into ISAs by the under 25s, £927m went into cash-only ISAs.

Helen Morrissey, personal finance specialist at Royal London, said: “Saving in cash clearly has a part to play for short-term emergencies and rainy day savings. But a combination of low interest rates and rising inflation means that money in a cash ISA is losing spending power, year after year.”

If you’re considering opening a stocks and shares ISA for the first time, there’s plenty of useful reading material in our investment section.

A good place to start is: A practical guide to moving from a cash to stocks and shares ISA

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
income drawdown
Mortgage debt held by over-65s to double by 2030

The amount of mortgage debt held by people over 65 is set to double from £20.2bn to £39.9bn by 2030,...