Two months since the Bank of England increased its Base Rate from 0.5% to 0.75%, the best cash ISA rates on offer are still struggling to help savers maintain the value of their hard-earned cash.
The highest instant access cash ISA rate available, according to Moneyfacts, is currently 1.38%. Whereas, even if you’re prepared to lock your money up for a two-year fixed term, you’ll still only be able to secure an annual rate of 1.82%.
With inflation figures reported to be 2.7% in August, this is worrying news for Britain’s ISA savers, who will see the value of their tax-free savings pots actually erode over time.
Source: Trading Economics/ Office for National Statistics (ONS)
Luckily, it’s not all bad news. Rates are gradually going up – the top ISA rate now available is the best for easy-access cash ISAs in last two years. However, with inflation continuing to remain above 2.5%, it could be some time before cash ISA savers see their pots grow in value in real terms.
But there are alternative ISAs...
While some ISA fans may be happy to wait it out, the amount of people deciding to invest their ISA money instead – putting their ISA money at risk, in hope of getting a better return – reached the highest number ever recorded in the 2017/18 tax year.
If you’re considering your ISA options, you can find some more information on our blog: What different types of ISA are there? And what's the best ISA for me?