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Have cash ISA savers hit ‘breaking point’?

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Some 60% of holders of cash ISAs say they are unhappy with the interest rate they are getting from their providers, according research from the peer-to-peer lender RateSetter.

The research was based on a poll of 2,090 UK adults, of which 978 owned a Cash ISA. Indeed in a further warning shot to cash ISA providers, some 24% of those with the tax wrapper said they were interested in opening a new Innovative Finance Isa (IFISA).

According to RateSetter those who switch could see an increase in the annual return from £224 to £540 for those who use up the full tax free allowance of £15,240. For those who make the average Isa investment of £5,924, the annual return would be boosted from £87 to £210.

However the research also revealed that only half of those with cash ISAs have never heard of the IFISA.

Rhydian Lewis, co-founder and CEO of RateSetter, says that the survey reveals that savers are reaching “breaking point”.

“The launch of new IFISA’s in April 2016 will put a welcome option on the table,” Lewis says. “With the majority of cash ISA holders identifying interest rates as a priority, this will give them the opportunity to increase their returns.

“We urge savers to think ‘What IF’ when it comes to taking out an ISA next year.”