How COULD an Isa pay 18p on £1,000?

... because last year was the worst ever for tax-free saving — no wonder thousands are ditching them

SAVERS have suffered the worst year for cash Isa returns since the accounts first appeared more than 18 years ago on April 6, 1999, a Money Mail investigation has found.

Our annual study of more than 125 variable rate accounts reveals that savers earned just a few pence on some easyaccess Isas all year.

One big bank paid only 18p interest on £1,000. A further six accounts paid less than 70p — more than 14 times less than the best deals.

The average rate for new savers is now 0.28pc, not even half the 0.59pc paid this time last year.

Rates tumbled so much that some accounts were paying as little as 0.01pc or 0.05pc at one stage in 2017.

Figures show that savers withdrew a total of £6.8 billion from cash Isas with big banks in the six months to November.

The base rate hike at the end of last year helped reverse some of the falls, but even though the general level of interest rates went up by 0.25pc, your rate with the big banks could have gone up by less.

Accounts where rates went up by less than this include Halifax Instant Isa Saver, Lloyds Instant Cash Isa, Bank of Scotland Instant Access Saver, RBS Instant Access Isa, NatWest Cash Isa, TSB Cash Isa Branch and TSB Cash Isa Saver.

Today, we name and shame the firms guilty of paying savers a pittance over the past 12 months.

We asked all the big banks and building societies how much interest they paid savers in 2017. Our survey included Halifax, Lloyds, Bank of Scotland, Barclays, RBS, NatWest, HSBC, Santander, Co-op and TSB, along with the five largest building societies — Nationaccess wide, Coventry, Yorkshire, Leeds and Skipton. Our bottom cash Isas are ranked by the amount of interest you earned on £1,000 in 2017. The vast majority of the accounts are no longer on sale. Some pay pitiful rates to savers who signed up at launch when they were among the top deals.

The worst is NatWest which has paid just 18p on £1,000 in its Cash Isa for the whole of 2017. It paid 0.01pc for most of the year and now pays a lowly 0.1pc.

Savers with less than £10,000 in their account are set to earn just £ 1 on £ 1,000, this year. With between £10,000 and £25,000 the rate is 0.25pc — giving £25 interest on £10,000. Even with £25,000 at the current 0.5pc, you’ll only see £125 next year.

Other banks, including TSB, Halifax, Lloyds and Bank of Scotland, paid just 63p interest on £1,000 and less than £20 on a £25,000 nest- egg this year. RBS Instant Access Isa managed 67p and Santander Easy Isa £1 on £1,000.

These, too, still pay miserly rates now. Bank of Scotland Instant Isa Saver, Halifax Instant Isa Saver, Lloyds Instant Cash Isa, TSB Cash Isa and Cash Isa Saver all pay just 0.2pc.

Santander Easy Isa and NatWest Cash Isa pay an even worse 0.1pc and RBS 0.25pc on £1,000.

Coventry BS Privilege Isa, closed to new savers, was the top runner, but even it paid just £14 on each £1,000 and now pays 1.65 pc.

Those in Coventry Poppy Isa along with its Easy Access Isa, Easy Access Isa issues 1 and 2 and Branch Instant Isa — all closed to new savers — also did better with £12 interest. Savers now earn 1.4 pc.

Government-sponsored National Savings & Investments paid £9 on £1,000, £90 on £10,000 and £213 on £ 25,000 and now pays a rate of 1 pc.

Some accounts which have paid better than average rates last year are set to pay you much less in 2018. For example, Virgin Money has cut the rates on its various Defined Access accounts. Its Defined Cash Isa 7, launched in June 2016 at 1.26 pc, now pays 0.51 pc. In 2017, your £10,000 earned £ 97. At 0.51 pc, that will almost halve to £51 for 2018.

Leeds BS has also cut rates from as much as 1 pc to 0.6 pc on its older Isas. Savers stuck in poor-paying accounts should get out now as rates will not be improving any time soon. And by switching to a better deal, you can raise your rate to 1 pc or more with the top deals. That will increase your interest on each £10,000 from £1 in the worst account to £100.

To switch your cash Isa to a better deal, check that your chosen provider accepts transfers into the account — not all do.

Fill in its transfer form and ask it to organise it for you.

Top deals for transfers on easy- accounts include 1.1 pc from Shawbrook Bank and 1.15 pc online from the Post Office. Or, in the High Street, 1 pc from Newcastle BS. Check your rate regularly to ensure it is still a good deal. The Post Office Online Isa rate includes a bonus payable for the first 12 months you are in the account. After that it drops to 0.25 pc so you must be ready to switch again then to make the most of your money. It can take up to 15 days for a transfer to go through. If it takes longer, your new provider must start paying you the higher rate from Day 15. The industry is, however, making a concerted effort to speed up the transfer process.

It’s a fact! The Grand National’s prize money goes to the top ten finishers. The winner gets £561,300 and the tenth placed, £1,000