Research by consumer group Which? has revealed that many loyal bank and building society customers are experiencing “woeful” interest rates from their ISAs.
The group analysed 212 ISAs from 21 UK providers to assess what rates they had on offer.
The Which? survey found a significant number of ISA rate cuts over the last six years, as the Bank of England’s base rate remained at a record low pushing interest rates down, with existing customers often losing out to new customers.
Harry Rose, money editor at Which?, said: “Too many banks are paying truly woeful rates of interest or are scissor-happy when it comes to cutting rates”.
He added savers did not always have time to hunt around for the strongest returns, which left many on poor rates.
Looking at rates for existing customers the group found that at the time of their study M&S Bank’s Flexi Cash ISA offered the worst rate to existing customers at 0.05 per cent after the initial 30-month bonus had expired.
Building societies were found overall to be more dependable than banks for making fewer cuts, according to the study, with Principality Building Society coming out on top making just one cut across five of its ISAs.
Following this revelation Mr Rose added: “Savers who do not want to keep moving their savings about should consider parking their cash with one of the more reliable building societies who have been better at not cutting their rates for existing savers.”
While this approach may not be best for your finances this research has revealed that failing to review and switch ISAs regularly may result in a loss of potential income – a point which is likely to become all too relevant when the ISA limits increase to £20,000 in April 2017.
Link: Which? Research