AA re-launches Internet Access ISA
Research from AA Savings shows that while half of adults say they ‘don't have much to save' in the current economic environment, most are unlikely to have used all of their ISA allowance.
This comes with the re-launch of the easy-access AA Internet Access ISA on 6th April, offering a best-buy 3.35% AER up to the £5,340 cash ISA allowance for the 2011/12 tax year.
According to the survey of 3,000 adults carried out for AA Savings by OnePoll, nearly three-quarters (72%) said they have at some time saved or are saving now, in a Cash ISA. But despite this seemingly high take-up fewer than half (45%) were aware of the 2010/11 £5,100 maximum Cash ISA allowance. 22% believed the limit that could be saved free of tax was still £3,600.
The research also showed that the majority of savers (53%) consider that the best use of a Cash ISA is for long-term savings, with another 17% saying its best use is for transfer of a lump sum that doesn't need to be touched.
Only 10% were aware that an ISA could be used as an easy-access account - yet this is an option provided by a number of ISAs, of which the AA's Internet Access ISA is a best-buy with a 3.35% interest rate. It offers unlimited deposits and withdrawals from £500 upwards.
Mark Huggins, director of AA Savings says: "It's encouraging to find that the majority of savers are aware of the tax-free status of ISAs, even though confusion remains over the tax-free maximum that can be saved which suggests that many have not been making full use of their allowance.
"The research also suggests that most people want to save what they can, when they can (65%), but prefer to be able to get their hands on their cash if they need it.
"For them, the AA Access ISA makes perfect sense, even if you can save only £500 because the interest earned is free of tax. You don't have to put in the full £5,340 allowance to benefit," he adds.
‘Not much to save'
Considering the current economic situation, nearly half (47%) admitted that they don't have much to save while another 27% said they were trying to save as much as they can. Only 2% said they think ‘there's no point in saving'.
"Despite the low interest rates compared with just a few years ago, most people are doing their best to put as much money away as they can," Mark Huggins says.
"But with the new tax year the first thing everyone able to save should do, is take maximum possible advantage of their tax-free Cash ISA allowance (now £5,340) whether they want instant access to their funds or intend to leave it untouched."
Savers can open an AA Access ISA online at theAA.com/savings from 6th March 2011.
The AA Access Cash ISA:
3.35% AER including 1.65% 12-month fixed bonus
Easy-access - unlimited deposits and withdrawals
Minimum £500 - maximum £5,340
AA Access ISA is an Internet account
Full terms and conditions at theAA.com/savings
Transfers from other cash ISAs are not allowed