Savers paid another £14bn into Cash ISAs in April – the biggest month on record, and one that tops off a huge year for the savings wrapper.
But why are savers rushing to the Cash ISA, what could be next for Cash ISA savings rates, and what can you do to get some of the best rates on the market?
This article isn’t personal advice. If you’re not sure if an action is right for you, ask for advice. Remember, ISA and tax rules can change, and benefits depend on individual circumstances.
Why are savers piling into Cash ISAs?
Strong rates and the ongoing debate over the future of the Cash ISA pushed tax-saving to the top of the to-do list for an awful lot of savers – keen to take advantage while they can.
Easy access products are likely to have been key beneficiaries of this rush, with savers attracted by the high headline rates and the bonus rates on offer.
However, not all of this will have been brand new savings.
The figures also showed savers withdrew £11.5bn from easy-access accounts paying interest, and £6.3bn from easy access accounts paying no interest.
This indicates a significant proportion of Cash ISA savings came from people withdrawing from savings and ploughing the money into their ISA equivalents to take advantage of the tax saving.
£14bn
What’s next for Cash ISAs?
As competition heated up over tax year end, rates remained elevated, but they’ve fallen since as the Bank of England chose to cut the base interest rate.
Easy-access rates are much more sensitive to interest rate cuts. So, while the most competitive fixed terms might not be offering quite as much interest as their easy-access equivalents, those easy-access deals are likely to be on their way down.
Savings rate cuts are likely to slow, and longer fixed terms could well rise, especially if concerns about inflation remain higher and gilt yields stay elevated.
If inflation is super-sticky, we could see the market become less convinced about rate cuts, which would mean strong fixed-rate deals are around for longer.
The level of uncertainty around right now makes forecasting more difficult, so it’s important to find the right balance between fixed and easy-access savings for your own needs – rather than trying to second guess what happens next in the world economy.
How to get great Cash ISA rates
It’s worth shopping around to try and get the best rates you can.
Here’s where the HL Cash ISA can help.
You can manage your Cash ISA portfolio with multiple banks all on a single online platform – so you can see everything in one place.
It also lets you spread your money across fixed-rate, easy-access, and limited-access products.
You can then manage it alongside your savings and investment accounts, all through one log in.
Just remember, products in the HL Cash ISA can be added or withdrawn at any time.
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