ISA rate reductions

Just in time for today's ISA allowance increase for the over 50s, Rumina Hassam, savings expert at uSwitch.com comments on recent rate reductions: "With 21 million over 50s eagerly awaiting tomorrow's ISA limit increase, it's really disappointing to see that four providers have cut their rates in the recent weeks, despite the static base rate.

"The highest cut has been on the Lloyds TSB one year fixed rate ISA, which has dropped from 3% to 2%. RBS and Natwest have also cut the rates on their instant access ISAs by as much as 0.25% with some accounts now offers returns as low as 0.5%.

"Sadly, we may see more of this ‘rate trimming' in the coming months as the average over 50 year old is set to earn around £32 a year more by using their increased ISA allowance. For many providers, this is money they simply do not want to part with. In fact, by taking advantage of the new full allowance, the over 50s could save up to £105k each by the time they hit retirement with interest totalling almost £28,000. This could provide a reasonable lump sum towards a decent pension income without the added risk of the stock market."