Savers in the UK in search of the most attractive ISA rates will soon see many banks offering improved offerings, according to one new report.
A new Financial Times report has found that banks and building societies offering ISA savings products will soon flood the marketplace as the current tax year draws to a close.
The best interest rates to be found on instant access ISAs are about 3 per cent, the newspaper reported. For savers in search of a better return on their investment, a longer-term fixed rate bond can provide a rate of four per cent or more, the FT continued. Even more attractive offers are on their way however.
The FT report will undoubtedly increase the already high popularity of ISAs among those who find interest rates on more standard personal and business bank account products insufficient for their needs. These more standard rates are unlikely to change any time soon, as the Bank of England’s Monetary Policy Committee choose to keep the base rate at its historic low of 0.5 per cent for what will be twenty four months in a row.
Industry experts have stated that many savers would benefit from depositing funds into an ISA up to the maximum allowance of £5,100. This is due to the tax-free nature of any interest accrued on these specialised savings products. This is especially attractive in the face of high inflation levels that would erode the interest of a savings product with a more modest rate of return.
An additional benefit of ISAs is the absence of any special requirements or tie-ins in order to achieve the tax-free interest. The financial services industry is also working to create transfer guarantee arrangements designed to streamline the sometimes sticky process of moving funds from one provider to another.