Friday, Jul 09, 2010
It already has had it's day at some banks and building societies.
Save Our Savers: Has the Cash ISA had its day?
Has the cash ISA had its day? It has been a remarkably popular and successful savings product. Introduced to encourage saving on its launch it provided returns much higher than standard deposit accounts that not only beat inflation but had the key attraction of being tax free.
Posted by mr g @ 07:30 PM (1760 views) Add Comment
6 Comments
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1. paul said...
recaptcha: millions tomorrow
First time too. Not joking. Unlike our banks' savings rates.
2. enuii said...
Current rates on some accounts equate to someone asking you to lend them £100 for a year in return for your money back plus a mars bar.
So there is little attraction for new punters.
3. tenyearstogetmymoneyback said...
I agree with enuii. On one account I spent half that years interest on the car park when I went to close it.
The fashion of the last five years has been regular savings / payments. Flip £1000 each month between Halifax and
Santander current accounts and you can get about 8% (but on a limited sum).
4. i remember the 90`s said...
Yes its a bad day when your better off going elsewhere ,paying tax on the interest and still getting a better deal.
5. mystie010 said...
I'm a bit of a one for conspiracy theories so here goes: Could the low rates paid on cash ISAs be a deliberate attempt to tempt everyone away from them and into taxable savings accounts? Could it be that once they become less popular with all of the money going elsewhere where it can be taxed, will rates then be improved? Just a thought - but if you were a government wanting to get your hands on part of the interest earned by your citizens, then possibly the best way to do it is to make the non taxable savings vehicles low interest and difficult to operate? Just a thought. I'd hang in there with ISAs I'm not entirely sure they have had their day, but there again I did predict interest rates to have risen by March this year :-(
6. tenyearstogetmymoneyback said...
mystie010
I don't think the Government is involved but would agree it is a conspiracy by the Building Societies and Banks.
In the past they were prepared to to pay higher interest as most people treated their ISA as a fixed term account,
so they were more valuable to them. Now they do the opposite thinking they can pay less interest because people
are unlikely to withdraw their money.
A real example. I have a YBS regular saver account (closed to new investors) which still pays 3.75% while their best ISA appears to be 2.5%. The difference is that the only hold they have over the regular savings customers is the attractive interest rate while with the ISA
they have the hold of it being Tax Free.