Worst-Ever Year For Cash ISAs: It’s Official.
A recent article in the Daily Mail’s Money Mail section (Jan 3rd, 2018) simply confirmed what every saver already knew: that cash ISA returns are, as they put it, ‘pathetic’.
In fact, the article went as far as ‘naming and shaming’ the worst accounts, based on the Mail’s annual study of more than 125 variable rate accounts. Top of the list was NatWest’s Cash ISA, which paid just 18p interest on a £1000 deposit. The top seven accounts on the list all paid less than £1 interest on £1000 – and all were high street names including TSB, Bank of Scotland, Halifax, Lloyds and RBS. Each of those accounts had an interest of 0.25% or lower.
The Mail’s reporter, Sylvia Morris, declared that 2017 had been the worst year for cash ISA returns since they were introduced back in 1999, and that because of tumbling rates thousands of savers had withdrawn a total of over £6.8 billion from cash ISAs in the six months to November.
So, if your savings are stuck in a poor-paying cash ISA, it’s time for a re-think. But what are your options?
Transfer to an easy access savings account
This is easy enough to do, but even the best fixed rate deals pay around 1.15% – still well below the rate of inflation (so your savings are dropping in value). Higher rates are available, but usually with a catch such as a bonus that disappears after a year, or not being able to invest a lump sum.
Change your current account
Truth is, the best interest rates on the high street come from savings accounts linked to current accounts – Nationwide’s FlexDirect account pays 5% on balances up to £2,500, for example. Again though, there are catches, The rates often drop after a year, and you need to deposit at least £1000 a month into the account (to qualify as a current account).
Invest in stocks and shares
Of course, stock market returns have long outpaced savings accounts, but there’s always been risk attached with no guaranteed winners. Having said that, the FTSE All-World Index jumped 22% last year, making the markets a very attractive proposition. The key is selecting the right ISA provider, who can give you intelligent ISA options that minimise the risk and maximise returns.
Look at alternative ISAs
One of the best options right now is a different form of ISA – not cash, but one that qualifies as a stocks and shares ISA.
In the Know is a specialist in intelligent ISA options and they will introduce you to regulated ISA experts who can review your investment opportunities, without any commitment or cost. To find out more, follow this link.