- Deposits with banks and building societies increased by £5.4 billion in May, a slight drop from April’s £5.7 billion.
- This includes £3.1 billion that flowed into ISAs and another £1.3 billion paid into interest-bearing accounts.
- Increases in deposits were partially offset by £2.3 billion of withdrawals.
- The average rate of interest paid on new fixed accounts rises again to 4.26% in May, from 4.07% in April and 3.76% in March.
- The average easy access rate remains unchanged from April at 1.65%.
Bank of England Money and Credit figures were released today. Please see here.
Clare Stinton, senior personal finance analyst, Hargreaves Lansdown:
“Last month saw £3.1 billion flow into ISAs and another £1.3 billion into savings accounts. People are choosing to house their hard-earned money in Cash ISAs and it’s easy to understand why.
As things stand, next April will bring a host of changes for savers. A reduced Cash ISA allowance for those aged 18-64 – this will coincide with the introduction of higher tax rates on savings interest outside of ISAs and pensions, not to mention last week’s mic-drop announcement that cash savings held in a Stocks & Shares ISA could face a 22% tax on interest from 2027. It’s use it or lose it and the countdown is on.
According to Moneyfacts, top easy access Cash ISA interest rates are sitting around 4.2%-4.6%. However, savers should be mindful that headline rates may include a bonus element that is time limited. Savers will be rewarded for shopping around, reading the small print, and remembering to review and switch their ISA account when any temporary bonus drops. This will help ensure their money continues to work as hard as possible.
One-year Cash ISA fixes are offering a bit more for your money, with rates between 4.55% – 4.70%. Just make sure you have a cash buffer elsewhere for emergencies and that you can afford to tie your money up for 12 months. Withdrawing money from a fixed-term product before maturity usually means forfeiting interest, possibly paying a fee on top, and may result in the account being closed.”
