Rates on top ISAs crumble

Many top-paying ISA providers this week slashed the interest rates offered on their tax-free savings accounts.

Price comparison site Moneynet said some providers have already reached their targets for ISA deposits during 2009-10, and have cut rates to keep away new customers.

Some ISA providers have completely withdrawn accounts from potential new customers, Moneynet said, with both Halifax and First Direct withdrawing their ISA offerings.

Barclays, meanwhile, which in April offered one of the best rates available, has cut interest on its basic cash ISA to just 0.1% for deposits over £18,000.

“It’s starting to look as if some providers may have reached their targets for ISA deposits already and are content to offer a poorer deal to those who have been slow off the mark,” said Andrew Haggar of Moneynet.

“We’re only two months into the new tax year, yet some of the more attractive cash Isa accounts have, in the last seven days, either had their rates slashed or been withdrawn completely,” Haggar added.

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