Britain’s biggest banks will pay savers as little as 38 pence interest on each £1,000 in their cash Isas this year.

Our analysis reveals it has been the worst year for cash Isas since their launch 21 years ago. Next year is set to be worse with some accounts expected to pay just 10 pence.

We have examined all the easy-access cash Isas offered by big banks and Nationwide to see what interest they will pay in 2020. Our research includes old accounts no longer on sale, but which were popular with savers.

Big banks will pay savers as little as 38 pence interest on each £1,000 in their cash Isas this year-  the worst ever year for cash Isas since they launched 21 years ago

Big banks will pay savers as little as 38 pence interest on each £1,000 in their cash Isas this year-  the worst ever year for cash Isas since they launched 21 years ago

Big banks will pay savers as little as 38 pence interest on each £1,000 in their cash Isas this year-  the worst ever year for cash Isas since they launched 21 years ago

The figures assume rates will not alter between now and the end of the year — but it will make little difference if they do.

We found that four cash Isas will reward savers with less than £1 on each £1,000 they have held over the past 12 months.

The worst cash Isa this year is an old Halifax account where savers will earn just 38 pence interest for the whole year. NatWest Cash Isa will pay just 67 pence. 

Even those who have held the full £20,000 annual Isa allowance for the 12 months since January 1 will barely see any interest. 

Halifax will pay less than £8, and NatWest manages only £13. Both are now paying savers just 0.01 per cent.

TSB Cash Isa Saver, RBS Instant Access Isa, Nationwide Instant Isa Saver 17 and both Santander Easy Isa and Isa Saver also pay this paltry rate. 

The big banks hold about two-thirds of the money held in savings accounts – or £195 billion of the total £293 billion in cash Isas.

Among the better deals are Virgin Money Double Take Cash E-Isa, which restricts you to making two withdrawals a year.

It paid £210 to those who invested the full £20,000 Isa allowance at the start of the year. The account is no longer on sale but those already in it should stick with it, at least for the time being. It is paying 0.61 per cent at the moment. 

Those with a NS&I Direct Isa also did comparatively well with £163 interest on the full allowance. But the brutal rate cut from 0.9 per cent to 0.1 per cent last month means savers will earn just £20 next year.

Ford Money Flexible Cash Isa is set to pay £161 interest on £20,000 during 2020, with a current rate of 0.5 per cent.

The appeal of cash Isas is that your interest is automatically tax-free. But lowly rates have meant savers are now ditching the once-popular accounts in their droves.

With savings rates so poor, the majority of savers won’t have to pay any tax on their interest anyway.

The personal allowance introduced in 2016 allows basic rate taxpayers to earn £1,000 of interest from ordinary savings accounts each year without paying tax. 

For higher rate taxpayers the limit is £500. During the pandemic we have ploughed £46 billion into taxable accounts. But the amount in cash Isas has fallen by £1 billion during same period from April to October.

Anna Bowes, co-founder of Savings Champion says: ‘There is no point in keeping money with the big banks whether you pay tax or not. They pay rock-bottom rates and there are better deals elsewhere.’

Coventry BS, often among the best payers, will give savers with £20,000 in its Easy Access 10 account £120 in interest this year. It currently has a rate of 0.4 per cent.

Another top account is Charter Savings Bank at 0.56 per cent.

To switch to a better deal, pick a new provider and ask the firm to arrange for your money to be transferred.

[email protected]


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THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS

This post first appeared on Dailymail.co.uk

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