Savers fail to shop around for best ISA rate
New research from Confused.com has found that British savers are failing to secure the best possible interest rate for their ISA by failing to shop around. The comparison website found that 65% of savers have never switched ISA provider.
Well publicised examples of poor service and providers struggling to cope with the transfer process for switching in recent years and has clearly had an effect , with one in ten savers admitting they hadn't switched due to concerns over providers' ability to process the application correctly and without their losing money. Just under half of savers (48%) said the low rates on offer weren't enough of an enticement for them to switch, believing the difference in potential interest wasn't worth the effort. 17% said they didn't know they were allowed to switch where their ISA was held, suggesting a need for better information regarding ISA rules and regulation.
Confused.com recently revealed that 43% of Brit's have never had an ISA and that 51% haven't used this year's cash ISA allowance, which must be invested before the end of the tax year on 5 April.
The comparison website also found:
30% chose to add this year's allowance to last year's account;
Just 14% shopped around for a new provider;
5% transferred a previous year's allowance and added this year's investment to a new account after shopping around;
London and the South West have the most people who didn't know you can switch - 22% each;
Savers in Northern Ireland are the most concerned about something going wrong when switching, 31% are concerned a mistake will be made and their money lost.
Chris Griffiths, head of Savings at Confused.com, said: "You should really try to evaluate how competitive your ISA is at least once a year to ensure you're getting the best return from your tax free savings. Many accounts come with introductory bonuses, typically for twelve months, which contribute to the headline interest rate meaning when these add-ons expire the interest earnings reduce dramatically.
"Shop around for the right account for you, consider managing your account online as the interest rates for these accounts may be higher and if you don't need access to your cash consider a fixed rate ISA as again it may offer a better return.
"With the end of the tax year rapidly approaching we'd urge savers to make the most of this year's tax free cash ISA allowance of £5,100, even if you can't afford to use the whole allowance it's worth saving what you can tax free."