Despite the prevailing low interest rates, new research has demonstrated that 31.5m UK adults intend to use their cash ISA allowance this year, representing an increase of over 25% from last year. What’s more, they’ll be putting away an average of £1,000 more than in the previous tax year.*
Saving and switching on the rise
Cash ISA rates may not be at their most attractive in the current financial climate, but that hasn’t deterred the Great British public, with the average amount people plan to save into a cash ISA increasing from £2,784 to £3,723 this tax year. In fact, nearly half of those surveyed said that they planned to stash away the whole amount. There’s also more of an appetite to shop around - 70% of ISA savers have now switched at least once to get a better rate, compared to just 51% last year.
When it comes to attitudes towards ISA saving, four in ten of those surveyed claimed that it was important to them to take advantage of the full cash ISA allowance, if their circumstances allowed it. To facilitate this, over 75% were willing to make short-term financial sacrifices in order to hit their target. Nearly a quarter were prepared to cut out daily treats in order to save.
However, another 23% stated that they weren’t prepared to sacrifice anything at all. Clearly, while many are in the cash ISA savings habit, not everyone is doing so. In fact, up to 19 million UK adults are still failing to take full advantage of this tax-free allowance.
Savers more discerning
A uSwitch personal finance expert commented: “While savers are up against it, it’s encouraging to see that more are willing to shop around and switch in order to get the best return. Last year we saw a big difference between the best fixed rate deals versus easy access deals, but not anymore. This year there’s little difference between the two, and with fixed rate cash isa deals offering little more than 2% interest, there’s scant incentive or reward for locking cash up in this way.
Despite these encouraging signs, many people are still set to lose out on £165 billion in tax-free savings by not taking full advantage of this year’s cash ISA allowance. The current climate means that ISA rates are lower than ever before – making it more important than ever for savers to find the right ISA to suit their needs. Making sure you’ve researched all your options is the best way to ensure you make the most of your hard-earned money. Use the tables at Fair Investment to compare some of the current market-leading cash ISA deals.
*Research carried out online with the uSwitch.com Consumer Opinion Panel in February 2013. Data from 1,768 British adults.