As interest rates continue to fall, more than a third of cash ISA holders are planning to turn their backs on tax free savings offering low returns, research from uSwitch.com has revealed.
The study found that, of the 4.3million savers planning to withdraw their cash ISA
balance, 20 per cent are doing so because of falling interest rates.
Since the Bank of England cut interest rates to one per cent, the average cash ISA rate has dropped to 2.05 per cent according to uSwitch.com, which is putting savers off.
However, as the ISA
deadline for this tax year approaches on April 5, uSwitch.com is urging savers not to ditch their tax free savings allowance.
According to its figures, savers who invest their £3,600 tax free allowance into a non-ISA account could lose up to £61 of their interest to the tax man, despite low interest rates.
And, as some cash ISAs continue to offer high interest rates, with Abbey cash ISAs
topping the best buy charts, uSwitch.com is urging Brits to make the most of them, as interest rates will not remain low forever.
Rumina Hassam, personal finance expert at uSwitch.com said: "There is no getting away from the fact that savers have been the sacrificial lambs of the plummeting base rate.
"However, ditching one of the few tax friendly government offerings may not be the best course of action for savers. Low rates will not last forever and as soon as the base rate starts to climb again, savings rates will follow suit. With some cash ISA savers accumulating ten years of tax free savings totalling £30,600, competitive returns are crucial."
Don't forget you can also invest a tax free total of £7,200 into stocks and shares ISAs
. Compare some of the best ISA deals around »
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