Two out of three savers suffer ISA bonus regrets
More than two out of three cash ISA savers admit to suffering bonus regrets despite planning to switch accounts when the special deal ends, new research from Virgin Money shows.
Even though only 14% of Cash ISA customers said they would not shop around when their ISA bonus deal runs out, over two-thirds (69%) admitted that they don’t actually get round to it. This means that, despite their best intentions, these customers end up receiving a lower rate of interest than they originally expected.
Industry research shows more than half of the 58 instant access cash ISAs launched last year came with bonuses, while a third of the 128 instant access taxed accounts launched in 2011 had bonuses which can be as high as 2.6% and can end with accounts paying as little as 0.1%.
HMRC statistics show the average amount invested in Cash ISAs last tax year was £3,190. An account paying 0.1% a year would earn a saver just £3.19 in interest compared with £90.92 in an account paying 2.85%.
The research from Virgin Money suggests that whilst many savers are aware of short-term bonuses, only 1 in 4 customers said that competitive rates in the short-term were the most important thing to them.
Anthony Mooney, Mortgage and Savings Director at Virgin Money, said: “While most of us like to think that we will remember to switch accounts when a bonus ends, the reality is that too often we don’t have the time or we simply forget to shop around.
“That can leave your savings stuck in an account paying an uncompetitive rate, which erodes the benefit from the up-front bonus. Virgin Money is focused on offering attractive, bonus-free rates to customers, whether they are investing online, in branches, on the phone or via the post.”
Virgin Money urges all savers to make the most of their ISA allowance – whether they choose a Cash ISA or a Stocks and Shares ISA, or a mixture of the two. Any savings or investments must be made by 5 April to qualify as part of the 2011/12 allowance, and any allowances not used this year are lost for good.
Virgin Money’s Easy Access Saver and Easy Access Cash ISA both pay 2.85% with the same rate offered to customers investing online, by post or telephone or in branches. The account accepts transfers in from existing ISAs.