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

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

    Reach Volunteering: Trustees with Finance, Fundraising and IT skills

    Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
    Markus Persson: If being that rich is so bad, why not just give it all away?

    That's a bit rich

    The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
    Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

    Coleman on course to end half a century of hurt for Wales

    Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
    Rugby World Cup 2015: The tournament's forgotten XV

    Forgotten XV of the rugby World Cup

    Now the squads are out, Chris Hewett picks a side of stars who missed the cut
    A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

    Britain's Atlantis

    Scientific study beneath North Sea could revolutionise how we see the past
    The Queen has 'done and said nothing that anybody will remember,' says Starkey

    The Queen has 'done and said nothing that anybody will remember'

    David Starkey's assessment
    Oliver Sacks said his life has been 'an enormous privilege and adventure'

    'An enormous privilege and adventure'

    Oliver Sacks writing about his life
    'Gibraltar is British, and it is going to stay British forever'

    'Gibraltar is British, and it is going to stay British forever'

    The Rock's Chief Minister hits back at Spanish government's 'lies'