Move your money before your ISA rate drops through the floor

Industry experts say now is most certainly not the time to rest on your laurels for anyone who took out a top-paying cash ISA this time last year, as the lion’s share of providers usually have 12 month introductory rates that leave you earning next to nothing once they drop off your ISA.

An ISA savings product that was offering a lucrative 3 per cent rate in May of 2011 could very well see you getting nothing more than 0.5 per cent after its initial first year has run its course, as banks and building societies seem to just love pulling the rug out from under their customers when they least expect it.  You could be left with a rate of return of  a paltry 0.5 per cent, thanks to the Bank of England’s Monetary Policy Committee for keeping the base rate so low for so long, and has led this time of year to be one of the most popular for switching to a less punishing tax-free savings product, according to the Office of Fair Trading; 40 per cent of last year’s 1.3 million transferred cash ISAs were moved in the three months after April, a new OFT report says.

This figure is only going to rise in 2012 as savers begin to realise how badly their banks are treating them by adjusting their rates downward – especially because it’s now a requirement for financial service providers to print interest rates on their customers’ annual statements, which are being sent out now for anyone who took out an ISA this time last year.  Some older accounts are giving back a minuscule 0.1 per cent, and once savers learn how badly they’re taking it on the chin, a mass exodus is expected to occur – and in a hurry.

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