Earn £183 extra this year – by ditching your Isa
SAVERS can earn hundreds of pounds more interest by switching their cash Isas from big banks.
On the full Isa allowance of £ 15,240, you can boost your interest by nearly £200, simply by moving to a better deal.
Banks and building societies are paying out £500 million less interest on cash Isas than a year ago — even though the amount of money sitting in these accounts has risen by £15 billion to £268 billion.
Falling rates mean they pay an average rate of 1.3 pc, nearly 20 pc down from the 1.6 pc this time last year. But with big banks you could be earning just 0.25 pc, and in a few cases as little as 0.1 pc.
Some banks do fancy footwork and hope you don’t notice your rock-bottom rate. They tempt you in with a bonus that lasts only 12 months or shove you into a back-water account after a year.
This time last year, Post Office Online Isa Easy Access 2 offered a top rate of 1.41 pc, including a bonus to new savers. After 12 months, the rate falls to 0.65 pc.
Those in its Online Isa Easy Access Issue 1, on sale at 1.51 pc from February to April last year, are in the same boat. With Post Office accounts, your money ends up with Bank of Ireland.
Halifax, Lloyds and Santander all move you to another account where you earn as little as 0.25 pc. Santander Direct Isa 11, which went on sale a year ago today, paid 1.25 pc. But after 12 months, the bank shuffles you over to its Isa Saver. This pays a paltry 0.25 pc on balances up to £10,000 and 0.75 pc on larger amounts.
The bank also runs an Easy Isa, where some earn just 0.1 pc.
Halifax Isa Saver Variable and Lloyds Bank Cash Isa Saver work in the same way. At Halifax, you move to its Instant Isa Saver; with Lloyds, you go to its Instant Cash Isa. Both pay just 0.25 pc.
NatWest and Barclays leave you in the same account — but they have cut rates on their once top-paying accounts.
With NatWest, you earn 0.25 pc if you have less than £25,000 in your account. The rate rises to just 0.5 pc between £25,000 and £50,000 and 0.75 pc on larger sums.
At Barclays it varies between 0.8 pc and 1 pc, depending on how much money is in your account.
You can transfer money into a better deal with another provider. M&S Bank and Sainsbury’s Bank pay 1.3 pc on their easy-access deals, available online or by phone. If you switch £15,240 from Santander’s Easy Isa at 0.1 pc, you could boost interest by £183.
In the High Street, the top rate is 1.35 pc from the Triple Access Saver Isa with Yorkshire BS, Chelsea BS and Barnsley BS. But you are limited to withdrawing money on three days a year.
Virgin Money’s Defined Access Isa Issue 6 pays 1.31 pc but limits you to three withdrawals a year. If you make more, your rate drops to 0.75 pc. The best High Street deals without withdrawal restrictions are 1.11 pc from Virgin Money’s Easy Access Cash Isa or 1.1 pc with Nationwide.
Top one-year fixed-rate deals include 1.4 pc with M&S Bank; in the High Street, it’s 1.25 pc from Skipton BS.