Savers have been rushing to make the most of the new ISA allowance despite low interest rates, says moneysupermarket.com.
The new tax year has just begun and data from the price comparison website has revealed that the new ISA rules are proving popular with consumers, with the site experiencing a 34 per cent increase in savings traffic during the first few days of ISA season, compared with the same time last year.
This means that despite the historically low base rate, at just 0.5 per cent, savers are still keen to find a good home for their money.
The new allowance came into force on April 6 and has given consumers an increased ISA limit of £10,200, of which £5,100 can be invested in a cash ISA.
Kevin Mountford, head of banking at moneysupermarket.com, said: “Making the most of your money is more important than ever when rates are struggling against inflation.
“Although this year, the rates on offer have been lower than we would have hoped, with very little movement expected in the market, savers would be better off taking out a product now to start accruing the interest immediately rather than waiting for a better deal at a higher rate. The large volume of traffic we have seen in April, suggests many savers have the right idea.”
Discount broker Willis Owen has also enjoyed its busiest start to a tax year since 2007 with a 24 per cent increase in the amount invested in ISA funds compared to the start of the 2007/08 tax year.
Figures from Willis Owen also show that a third of investors who have opened an ISA since 5 April 2010 have used the full £10,200 allowance.
Alan Easter, Director of discount broker Willis Owen, said: “Investors know that tax rises are on the way whatever party forms the next Government. So those with the cash to invest now are right to secure the full ISA allowance as soon as possible.
"The early birds are also looking for an income from their investments. With returns still relatively low on the high street it is no surprise that savers are looking for an alternative home for their money. The key advantage of holding funds within an ISA is that the income generated is not taxed. If you are looking to boost your monthly earnings or top up your pension an ISA really is a great way to save and invest. “
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