Now cash Isa rates hit new low

STOP SHORT CHANGING SAVERS

SAVERS are set to suffer further as three of the four biggest High Street banks slash their cash Isa rates.

Experts say it is the worst cash Isa season in three years, with rates tumbling to 0.15 pc.

Barclays Bank cut its cash Isa rate this morning, while HSBC has announced its rates are set to fall just before Christmas.

They follow hot on the heels of Lloyds Bank, which reduced rates for loyal savers last month. And experts have warned that more cuts could well follow.

From today, savers in Barclays Instant Cash Isa will earn just 0.4 pc on sums up to £30,000 — or a paltry £4 interest on every £1,000 in the account. It means they are now earning the same as nearly three years ago when the Bank of England base rate stood at a rock-bottom 0.25 pc against 0.75 pc today.

Those with between £30,000 and £100,000 in the Barclays account will earn even less at 0.45 pc, down from 0.65 pc. HSBC’s standard rate on its Loyalty Isa is dropping to 0.5 pc from December 18. Last month Lloyds cut its Instant Cash Isa rate from 0.35 pc to 0.2 pc. Other cuts in the pipeline include Tesco Bank; its Instant Access Cash Isa rate will nearly halve from 0.65 pc to 0.35 pc from October 24. TSB now pays only 0.15 pc on its Cash Isa Saver following cuts last month.

Rachel Springall, finance expert at Moneyfacts, says: ‘Savers will be disappointed with the worst Isa season for three years.’

The average rate on an easy-access cash Isas is down at 0.95 pc compared with 0.98 pc in April (the time of year when savers qualify for a new annual Isa allowance). For this tax year you can save up to £20,000 in these taxfree accounts. NatWest, the only bank out of the big four not to cut its rates so far, already pays a miserly 0.2 pc on balances up to £10,000 and 0.85 pc on £50,000 or more.

Other popular accounts such as Halifax Instant Isa Saver also pays just 0.2 pc.

Savers should seriously consider switching their money to another provider for a better rate. Family BS pays 1.34 pc on its Market Tracker Saver available online, by post or through its branch in Epsom, Surrey.

The rate is set at the average of the 20 best rates plus 0.05 percentage points.

It would earn you an extra £131 a year more in interest on each £10,000 compared to if you left it in TSB’s account paying 0.15 pc.

With Coventry BS Limited Access Isa the rate is a higher 1.46 pc, but you are limited to making three withdrawals a year. The rate is also boosted by a 0.31 pc bonus until January 2021 when the rate drops to 1.15 pc. It’s available online, by post or in its branches.

To switch your cash Isa, ask your new provider to arrange the transfer for you.