Cash ISA savers are being warned by Defaqto that remaining loyal to their current provider could be an 'expensive mistake' if their account is paying a poor rate of interest.
With ISA season gathering momentum and the end of the current tax year just days away, cash ISA savers are being urged not to settle for a poor performing account and to check whether their current deal is still competitive.
According to Defaqto, 87 per cent of the cash ISAs currently on the market accept ISA transfers should savers consider switching to a higher earning account.
David Black, banking specialist at Defaqto, claims that some cash ISAs are paying as little as 0.10 per cent interest – the equivalent of £3.60 in annual interest on a £3,600 balance.
However, he suggests that if savers transfer this balance into one of the highest earning cash ISAs on the market – paying five per cent, savers would get an additional £173 in annual interest.
In addition, if savers took advantage of the increased ISA allowance of £5,100 – which is already available to over 50s and will be rolled out to all savers on 6 April – the additional annual interest would total £249.
Commenting, Mr Black expects ISA providers to offer a broad range of deals to attract new savers.
"Many banks and building societies ‘bulk up' their ISA offerings at this time of year to grab market share. In many cases the best variable interest rates will be from newly launched accounts with some sort of guarantee or introductory bonus," he said.
Acknowledging that ISA season can be a confusing time for many people, Mr Black added that when savers are looking to transfer their ISA, they should not only look at the rate offered, but also what type of ISA it is and the minimum balance required to "ensure it meets their investment needs".
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