Cash ISA update as savers are told to take urgent action
Cash ISA savers have been urged to take one action as an important deadline approaches. Those who have a Cash ISA are being urged by money experts to act before May 1 in order not to miss out when new changes come into effect. The Bank of England is anticipated to cut rates at the next Monetary Policy Committee meeting, which takes place on May 8, which is expected to trigger a fall in Cash ISA interest rates.
Now, savers are being urged to lock away their money as soon as possible to accounts with higher interest rates to make sure they are getting the most out of their money. Founder and managing director at financial education specialists Investing Insiders has urged people to place their money into a fixed Cash ISA, which are protected against base rate reductions. Savers who tranfer their money to these accounts now will ensure that they enjoy the current interest rates for a year.
Medlicott said: 'With Cash ISAs currently offering up to nearly five per cent in interest on deposits and some offering even more with introductory rates, savers can gain peace of mind over the returns they will receive and some great rates.
'However, most of the top-paying accounts offer 'variable' rates, meaning they can go up and down as the Bank of England rate fluctuates. You will generally get easier access to the cash held in these accounts.'
She added: 'Fixed rate savings accounts typically require you to lock your money away for a set period of time, but offer certainty over interest rates, no matter what the Bank of England does.'
Reports of Government plans to reduce the Cash ISA limit have been shared by money expert Martin Lewis, placing more urgency on savers to secure their benefits ASAP.
Chancellor of the Exchequer Rachel Reeves is rumoured to be considering cutting the current ISA limit of £20,000 to as low as £4,000.
Lewis said: 'Rachel Reeves, has been evaluating cutting the cash ISA allowance. That's not a rumour. I know it for fact. And it's being talked about in political and policy circles. What we don't know is if anything has been decided and if it has, what has been decided.
'So, as a very basic concept, a cash ISA is just a savings account where the interest is never taxed and you can put in up to £20,000 per tax year – and we've just had the start of a new tax year on 6 April. Once the money is in a cash ISA, it stays tax-free year after year.
'Now, the rumour is, what's being considered, is cutting the cash ISA limit from the current £20,000 down to as low as just £4,000. And most people think if there is to be an announcement on it, it would be in the Autumn Budget coming later this year – though nothing is certain.'
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