£182bn of tax-free savings unused
More than three quarters of savers are unaware that everyone aged 16 and over is allowed to put £5,340 into cash ISA this year, according to research from uSwitch.
Only half of savers are planning to put any money at all into a cash ISA, and just a quarter are using their total allowance, the price comparison and switching website says.
On average, savers using this product are putting in just £2,784, which means that collectively they are missing out on £182 billion in tax-free savings.
Half of those with an ISA don’t know what interest rate they are getting and 47% have never switched accounts to get a better deal.
Michael Ossei, personal finance expert for uSwitch.com, said: “With household finances being battered by the rising cost of living and frozen pay, savings are often the first casualty.
“But given the current level of uncertainty, having savings to fall back on is more important than ever.”
u-Switch found that a quarter of savers wouldn’t make any sacrifices in order to use their full ISA allowance, but 16% would sacrifice a holiday, 22% would reduce their spending on luxuries and 12% said they would give up a new car.
There are a number of new products which could attract savers currently considering an ISA.
Virgin Money recently launched an Early Bird Isa Feeder which offers 3.57% interest until 5 April.
The cash is then transferred into a 2.85% variable rate Early Bird Isa for the tax year to April 2013.
The Co-operative Bank has also launched two Isas, including a Select Access Cash Isa which pays 2.25% and allows customers two free withdrawals a year without any notice.
Offering a higher rate, the bank’s new 18-month fixed-rate cash ISA pays 2.9% to current account customers or 2.7% to new customers.