The latest research released by NS&I suggests that there has been an increase in the number of people who’ll be making use of their annual ISA allowance.*
Despite the Bank of England base rate maintaining an historic low of 0.5% since March 2009, it seems that savers are coming to terms with lower rates of interest on saving products. A general air of acceptance, as savers make the best of poor interest rates, seems to be the order of the day. Of 1,200 adults surveyed by NS&I 9% said that they found the current rates on ISAs off-putting, representing a decrease from 30% in 2010, when the shock of the low base rate was still relatively raw.
Mixed reactions on the ISA scene
The research suggests that slightly more people will be using at least a proportion of their annual tax-free ISA allowance this year, with around 18% responding in the affirmative. This represents a rise of 2% from last year and 3% from the year before. However, the number of people who will take advantage of their full ISA allowance has fallen slightly. According the research, just under a quarter intend to use their full £11,280 allowance in this tax year, down from just over a quarter in 2011/12. This is perhaps due to a general tightening of belts as people have to make their money work harder – in fact, 32% of those surveyed said that they couldn’t afford to use any of the ISA allowance at all this year.
Greater customer awareness
On a positive note, NS&I’s research suggests that public understanding of financial products is increasing. Almost 15% surveyed three years ago admitted that they didn’t even know what an ISA was – a figure that has now fallen to 6%. Savers also seem more risk-averse than in past years. Just over 25% of those interviewed said that they would choose a cash ISA as opposed to an investment ISA, citing the more volatile, higher risk nature of the stock market as the reason for this. This has increased from 21% last year.
Commenting on the findings, John Prout, NS&I’s Retail Customer Director, said: “it’s encouraging that almost half of us are utilising the tax-free shelter that ISAs provide.
* Source: Survey of 1,206 UK adults, conducted between 5th and 7th February 2013.
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