ISA rates fall to new low

Remember when things looked grim last year? When savers thought that credit interest rates on savings could not possibly get any worse? They got worse.

One group who are probably feeling particularly dumped upon are those relying on savings income. We’re not talking about those with replete trust funds, but this group includes pensioners and others on a fixed income.

The Bank of England confirmed today that the historic 0.5% base rate of interest will remain in place for another record-breaking month. Good news for those looking to borrow money, but monotonously depressing news for savers. Exacerbating the problem is the Government’s new Funding for Lending scheme that came online at the latter end of last year. This provides Government-backed money to encourage banks to start lending again. And it does seem to have worked, with preliminary figures suggesting an increase in lending. Which is bound to kick-start the economy and get us all back on our feet etc etc.

But as with most things, for every action there is a consequence and at the other end of the lending seesaw sit the poor savers. Now the banks don’t even need their money- they can lend out the Government’s money instead- meaning that interest rates on savings are falling even further. Which you may not have thought was even possible.

Even ISAs, at a time when the rate traditionally starts increasing in a final push for banks to get their paws on your money for this tax year, are down in the rate doldrums. Figures from suggest that the average ISA rate last February was 2.55%pa (which is pretty dire), but that 2013 is hitting a new low with an average ISA rate of just 1.74%. There is also a fifth less ISA option to choose from.

Mind you, if you want to beat even the lower measure of inflation, the only cash ISA surrently offering a rate above 2.7% (CPI) is Coventry Building Society at 2.8%, although you cannot transfer in old ISA balances. The best rate available for transfers in is 2.5% with the Cheshire.

Sylvia Waycot, editor at, said: "Savers are desperate for some good news and the ISA season has always been a pretty reliable time for finding that account you're really pleased about. But it may be a lot harder to find this year."


  • Captain C.
    First Direct offer 8% AER for 1 year on their "Regular Saver" scheme. You have to pay tax, but even so, it is far, far more than any ISA right now.
  • james
    you can only put 300 a month into that though, which is pitiful (but better than nothing certainly)
  • james
    They often have a few "good" offers in the weeks leading up to the ISA deadline, so that might be the best time to look (from about the 2nd week of March), but then you have to get a move on to actually transfer the funds before the deadline. especially if you are transferring from other years.
  • jim
    wish i had some money to save :(
  • Captain C.
    @ james £300 in the first month, it goes up by an additional £300 each month after that. (if I have read the T&Cs correctly). Even at a "mere" £300 a month, that is no less than you are allowed for an ISA. I have set one up for my new baby daughter in the hope that, by the time the interest drops to 0.00001% there will be something else with a decent interest rate available SOMEWHERE in the market. Sadly, as a mere Nursery Nurse, I cannot afford to put in £300 a month, £50 is as much spare cash as I can find. The only fund I know of that has a half decent return requires a minimum £7k opening balance :-( (Wesleyan Assurance Society)
  • noshit
    I think the cunning plan is to get you to spend that 15k you've spent 10 years saving up on plastic Chinese goods & more over to borrow even more to spend on even more shit so you can spend the next decade doing overtime in your shit job to pay back the interest. Get involved with the next fad and buy all the dog shit that comes with it and all the top boys will be very happy with you. It's a shame the kids of today put fish food and weed killer up their noses these days coz in the early ninties you could make some good money on Es and speed. So things are limited to investing in your zany cousins new internet shop or sticking it in the bank for fuck all. Happy dayz.
  • james
    apologies CC, I didn't mean to insinuate that £300 a month was nothing and I hope I didn't cause offence. I was trying to suggest that the limited nature of the account was pitiful generally, not the amount. You can put an additional £300 in every month, but be aware that because of the way these accounts work, at the end of a year you are getting 8% on £1800 not on the full £3600, because you are drip feeding the money in, some people are shocked when the interest is half what they were expecting, but yes you are right, it's definitely the best deal at the moment if you have a little each month to feed in, and it's good to highlight the account for those who don't know about it. Also I don't consider anyone to be a "mere" Nursery Nurse. That is a valuable job to society. My little one has just turned 3 and started at nursery and I admire the nursery staff and the job that they do enormously.
  • Phuck Y.
    Simple answer, Captain Cretin, don't have kids, you daft fucking bint.
  • Captain C.
    Hello Yu, always a real pleasure to read your posts; but I am disturbed by your sexism. I am not a bint, I am a bloke. PS, "Yu" is a surname and hence goes first in Chinese, so Yu Phuck !!! @ James, no offence taken

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