Nowhere is this more apparent than with Cash ISAs. In a survey for watchdog Consumer Focus, the average interest received on cash Isas was less than 0.5% a year. With rates of 3% to 4% available, it suggests consumers are not shopping around.
It is good practice to retain some cash in an easy-access, readily available deposit account to make sure you can cover unforeseen emergencies and short-term needs. However, there is no reason to tie up all your cash holdings in this type of account. The Consumer Focus research found around 60% of cash Isa holders never withdraw money from their account. Interest rates can be significantly higher for those willing to sacrifice some flexibility.
“Putting a reminder in your calendar now to shop around for a better cash-ISA rate in a year’s time is essential if you want a half-decent return,” suggests Consumer Focus. “Unless you check your rates each year you are likely to end up with a poor return on your savings.”
Paul Dixon FPFS
Chartered Financial Planner
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Census Financial Planning is an independent financial planning practice providing a professional and comprehensive financial planning service, located on the Lisburn Road in Belfast, Northern Ireland.
