Thousands of savers who rushed to beat last year’s ISA deadline will see their rates plummet in the coming weeks.
Every year sees a rush of last minute savers looking to take advantage of the £3,600 tax free allowance before the April 5 deadline.
However, as many top paying savings accounts come with a one year bonus rate, this is also the time of year that many ISA savers are dumped onto a far less competitive rate.
Need to switch now if affected
Banks have been using introductory bonus rates for some time to lure savers with an attractive headline rate.
When the bonus rate finally expires (almost always after one year), most savers have forgotten about the need to switch accounts, leaving them in a very profitable net for the banks.
As a result, bonus rates are extremely popular amongst all the banks, be they High Street giants or online specialists.
My own Alliance & Leicester account recently fell by 1%, but some savers will see theirs plummet by as much as 1.5%.
If you did take out an ISA around this time last year, it’s absolutely essential you check whether it includes a bonus rate and transfer your funds as necessary.
Make sure you use this year’s allowance
For those yet to use this year’s tax free allowance, it’s essential you do so quickly, as the deadline is just over two weeks away.
The best paying access ISAs on the market still pay around 3.51%, but those willing to risk locking their money away for a few years can earn as much as 4.10%.
Take a look at our cash ISA best buy table or, if you want to join the burgeoning group of investors earning tax-free returns on the stock market, see our self select ISAs.
