ISA savers risk losing half a billion pounds collectively this year by not switching their ISA to an improved deal as soon as the bonus rate expires on an existing account.
Kevin Mountford, head of banking at MoneySupermarket said: “If you have funds in an existing ISA and have held this for more than 12 months then the chances are, you will be receiving a rate far lower than you can receive on the current leading products in the market. It is therefore vital that ISA savers check the current rates paid on their ISA and be prepared to switch. The majority of banks are not proactive when it comes to making sure you are on the best deal, so it pays to be savvy and not let them get away with it. The difference between the average and top paying rates can be significant, and with less than four weeks to go until the end of this current tax year ends on 5th April, savers should look to make the most of their tax efficient ISA allowance, which for cash ISAs this tax year is £5,640. Moving to a better deal can go a long way to help maximise returns.
“Switching an existing ISA balance to a market leading deal which allows transfers in can help maximise your savings. Despite low interest rates, the amount of money you can earn by doing so can be significant. However, make sure you follow the official ISA switching rules and watch out for any penalties or charges for doing so. Savers planning to switch ISA accounts should avoid withdrawing the cash- as it will lose its tax-free status. Instead, speak to your provider about arranging the transfer instead, or face losing your tax advantage.”
