ISA rates cut back after the hard sell

Think your savings are safe with the Bank of England base rate frozen at 4.5 per cent for the 11th month in a row? Think again.

Those with money sensibly stashed in a tax-free mini cash individual savings account (ISA) have seen rates slashed by up to 0.45 percentage points in the past three months alone, new research shows.

Around the time of the new tax year in April, ISA providers were keen to promote their headline-grabbing rates.

"Back then, we saw well over 30 new or revamped variable-rate ISAs hitting the market," says Rachel Thrussell at financial analyst Moneyfacts. "But we predicted these rates wouldn't last - and this has certainly been the case."

Now that the dust from the frenzy of the new financial year has settled, many providers are reducing the rates available.

Since the beginning of this month, Marks & Spencer Money has lopped off a whole quarter point, while Royal Bank of Scotland has reduced the rates on its mini cash ISAs by up to 0.1 percentage points. Lloyds TSB has also cut its mini cash ISA rates by 0.05 percentage points.

Last month there were even heftier cuts. Barclays and the Woolwich both dropped their rates by up to 0.45 percentage points, while HSBC lowered its rate by up to 0.43 points.

Companies have swung the axe for a mix of reasons. They are seeking to maintain their profit margins and, while the Bank base rate may be static at present, falls are anticipated in long-term interest rates. They also think customers won't make the effort to move elsewhere.

Notwithstanding the cuts, a mini cash ISA is still an essential part of a saver's armoury, says Sue Hannums at independent financial adviser Chase de Vere Wealth Management.

Fail to make the most of this tax-free savings wrapper and you are in effect handing money to the Chancellor's coffers. You can save up to £3,000 a year in a mini cash ISA, and many accounts offer penalty-free access.

With rates falling, savers must check how much they are now earning on their money. "You may find the rate you took back in April has taken a sudden tumble," warns Ms Thrussell.

There are plenty of good deals still available - with some topping 5 per cent.

"Fixed rates have been booming in recent months and Northern Rock has an ISA fixed for one year, until 15 August 2007, paying 5.15 per cent on £500."

Ms Hannums also recommends Bradford & Bingley, which is paying 5 per cent on its internet account on balances of £1,000.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Sport
footballShirt then goes on sale on Gumtree
Voices
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
tv
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine