It’s that time of year when money buffs would usually be getting into an almighty froth about the tantalising range of ISAs being flouted by banks and building societies hankering to get their trade in - ISA season.
This year, however, things are a bit different. Looking around the various deals on offer, ISA season doesn’t look like serving up the rate bonanza it usually does. In fact, you might say it’s something of a damp squib.
The numbers make for stark reading – last year, the average rate on offer for lower-risk cash ISAs was 2.55% - this year, that’s down to a trifling 1.55%.
A historically low base rate hasn’t helped matters, and with talk being bandied around of negative interest, this isn’t going to change anytime soon. The government’s Funding for Lending scheme has also meant that banks have had a ready supply of cash to lend, so there’s been less of an appetite to raise funds through enticing people to put their savings in.
There’s some cause for optimism though – Santander has just launched a selection of cash ISAs which buck the current selection of piffling rates – including an easy-access account paying 2.5% for 12 months, and a two-year fixed rate paying up to 3%. Barclays and HSBC have both also launched ISAs paying up to 2.3% and up to 2.75% respectively. But when considering that savers could enjoy average rates of 5.15% five years ago, it will come as little comfort.
With the 2013 ISA season far from a vintage year, there are still ways to make your savings work harder.
FIXED-RATE CASH ISAS
Fixed-rate cash ISAs may be able to offer a halfway house between the currently sluggish cash ISA market, and their riskier stocks and shares cousins – more on them later.
There are a number of fixed-rate offers which are further towards last year’s 2.5% rates although as always, there are a few caveats. While you may be rewarded with better rates, there’s a good chance that you won’t actually be able to get your hands on your money for a fixed period of time. You may also require a minimum deposit of £1,000 or so.
STOCKS & SHARES ISAS
Stocks & shares ISAs are, as their name suggests, linked to the stock market. They are a riskier proposition than cash ISAs but have the potential to be much more rewarding – particularly if you’re a long-haul investor willing to keep your money in for at least five years, which will significantly reduce the chances of you losing money.
Did you know you can compare the best savings accounts with Gocompare.com?
Please note that the value of your investment can go down as well as up, and you may not get back the full amount you invest. If in any doubt, contact your local friendly financial advisor.