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ISAs best for savings despite falling interest rates

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by David Masters

ISAs are best for savings despite falling interest rates

Savers should make the most of their money by saving in a tax free ISA, moenysupermarket.com said on Wednesday.

Calculations by the price comparison site found that savers who have used their full ISA allowance for the past 10 years will be £2,700 better off than a basic level taxpayer who saved their money in a non-ISA account.

Higher rate taxpayers were calculated to be £4,800 worse off.

ISAs are still a good option despite the dramatic fall in interest rates over the past four months, moneysupermarket.com said.

Kevin Mountford, moneysupermarket.com head of banking, said: “Inflation is on the way down and cash ISAs are paying around 3.25 per cent, so they are still a very good proposition for savers.

He added that since interest on ISAs has on average halved since 12 months ago, savers need to more than ever to make sure their savings are working hard for them.

“An extra £2,700 over 10 years is nothing to be sniffed at” Mountford said.

Moneysupermarket.com recently reported its 2008 results, with a loss of £51 million.

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News posted: February 27, 2009

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