Scottish Daily Mail

Banks hit savers with miserable flexible Isa rates

By Sylvia Morris

- sy.morris@dailymail.co.uk Sylvia’s savings tables are updated daily thisismone­y.co.uk/saving

SAVERS looking to transfer their cash Isas won’t get the best deal if they want to take advantage of new flexible withdrawal rules.

These let you take money out of your cash Isa and put it back in without losing the tax break — as long as you return it to your Isa in the same tax year as you made the withdrawal.

But Money Mail research shows the best you can do on the new easy-access ‘flexible Isa’ deals is 1.11 pc, against 1.3 pc in the oldstyle accounts.

It is bad news for those who have built up savings in these taxfree accounts and want to dip into them from time to time.

Crucially it is up to each bank or building society to decide whether or not it will offer the flexible Isa or convert their existing cash Isas to give you this freedom.

Shockingly, only 21 providers — less than one in six — offer this flexibilit­y on any of their Isa accounts, figures from the advice website Savings Champion reveal.

The huge majority — 121 banks and building societies — do not.

Anna Bowes, director at Savings Champion, says: ‘Transferri­ng your cash Isa has just become more confusing. The rules are complex and few providers offer the flexible facility.’ Under cash Isa rules, you can transfer your money from one provider to another at any time — as long as the new provider accepts transfers. Early summer is a busy time for switching. When an annual statement drops through the letter box, savers can find their rate has tumbled over the past 12 months. Sticking with your old provider, such as Halifax, Lloyds or Santander, can mean earning just 0.25 pc. Other providers pay as much as 1.3pc on easyaccess accounts. That’s £105 extra interest on each £10,000. Savers wanting to dip in and out of their pots now face the tiresome task of checking whether this is allowed, as well as searching out the best deal and checking if the provider accepts transfers from other providers — many don’t. To get the best combinatio­n, you can end up splitting money between providers — one with the best rate and another which offers flexibilit­y. Money Mail found that among the top-paying accounts there are no fewer than five contrastin­g sets of restrictio­ns. For example, Coventry BS’s Easy Access Isa 3 doesn’t accept transfers, but is flexible. Meanwhile, Nationwide’s Flexclusiv­e Isa accepts transfers, is flexible — but is available only to its current account holders.

Family BS’s Market Tracker account is not flexible, but will accept transfers — as long as your current provider has not converted your account into a flexible one.

Sainsbury’s Bank, which cut its rate to new savers to 1.2pc this week, down from 1.3pc, accepts transfers, but does not let you dip in and out of your savings.

If you want flexibilit­y on at least part of your cash Isa money, the best deal is Virgin Money’s Easy Access Cash Isa at 1.11pc or Nationwide’s Instant Isa Saver at 1.1 pc.

Some fixed-rate cash Isas are flexible, too. But if you take out money before the end of the term you have to pay the early encashment charge, which can mean losing as much as six months’ interest.

Top one-year deals that accept transfers include Britannia, part of Co-op Bank, at 1.4 pc, or Tesco Bank at 1.3 pc.

For two years, Britannia pays 1.5pc and Shawbrook Bank and Leeds BS offer 1.4 pc.

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