LAST CALL FOR ISAS
You can get slightly more if you fix, for example, Skipton Building Society and Paragon Bank offer online accounts paying 1.20 per cent over two years, while Paragon pays 1.75 per cent on its five-year bond. Cash Isas have also been undermined by the personal savings allowance, which allows basic rate taxpayers to take £1,000 a year in interest from non-Isa savings without paying income tax, or £500 for higher rate taxpayers.
Simon Healy, managing director of challenger bank Aldermore, says cash Isas still have a role to play, particularly for higher rate taxpayers. “Its tax-free status is helpful for long-term savers with larger pots and will become even more important as interest rates start to increase.”
While cash Isas flounder, stocks and shares Isas have raced ahead to grow 15.8 per cent over the past year, their strongest performance for seven years.
Richard Eagling, head of pensions and investments at MoneyFacts, says too many savers are losing out.
“Cash Isas remain the default choice despite low interest rates, and savers have missed out on the merits of stocks and shares Isas.”
Many will be tempted to invest more in the stock market but be warned, there is no guarantee that its recent strong run will continue. This special Isa supplement should help you decide where to put your money.