22 Dec 2024

ISA Prisoners get Life

Moneyfacts research reveals that only three of the top-paying variable cash ISAs will allow you to transfer money in, as opposed to nine out of ten, two years ago.

Savers who have managed to squirrel away their yearly cash ISA allowance since launch in 1999 will be sitting on a nest egg of £50,280 (£51,780 for over 50s), disregarding interest.

These vast pots are now presenting problems for investors who have traditionally viewed ISAs as one year products, historically moving the pot each year to the latest top-paying account.

Half of the top-paying accounts include a 12-month introductory bonus which masks the underlying rate savers will receive if they do not move their money after the bonus period ends.

Investors are going to find it increasingly difficult to move their entire pot to a new top-paying ISA, resulting in not only needing to juggle several ISA accounts but potentially being trapped long-term in accounts that don’t pay the most attractive rates.

BEST BUYS - ISAs - Variable
Company	Gross	Intro Bonus	Transfers In	Notice/Term	Min Investment	Interest Paid
Coventry BS	2.80%	Yes	No	60 Day	£1	Ann'sry
Chorley & District BS	2.50%	No	No	60 Day	£1	Yearly
Cheshire BS	2.50%	Yes	Yes	None	£1,000	Yearly
Harpenden BS	2.25%	No	Yes	Instant	£1	Yearly
Stafford Railway BS	2.25%	No	No	Instant	£1	Yearly
National Savings & Investments	2.25%	No	No	None	£100	Yearly
GE Capital Direct	2.25%	No	No	None	£500	Ann'sry
Triodos Bank	2.15%	Yes	Yes	90 Day	£10	½ Yearly
Tesco Bank	2.10%	Yes	No	None	£1	Ann'sry
Barclays Bank	2.08%	Yes	Yes	Instant	£1	Monthly
Source: Moneyfacts.co.uk

Sylvia Waycot, Editor at Moneyfacts.co.uk, said:

“The silent withdrawal of transferable ISAs may mean that savers need to rethink how they view ISAs.
Traditionally, savers change providers yearly, taking all their cash with them. The relationship has been based entirely on rate.

“But if providers are closing the door to transfers, savers may find they are stuck in limited accounts that have lost their appeal once the annual bonus has worn off.

“With two thirds of the top-paying ISAs and a fifth of variable ISAs not allowing transfers in, savers with the largest pots are already being turned away, leaving them either with the same provider as last year, in an account that could be paying peanuts because the bonus has expired or with a new account that is not a best buy.

“Whilst this current trend remains, savers need to find an ISA that not only pays a great rate but also from a provider that they are comfortable doing business with for longer than 12 months, lest they become ISA prisoners for life.”

Moneyfacts Group

Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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