ISAs continue to grow in popularity

| February 17, 2010 | 0 Comments

Research by the Halifax has revealed the growing popularity of Individual Savings Accounts (ISAs).

The Halifax, which is now part of the Lloyds Banking Group, said the number of accounts opened in the nine years to March 2009 surged by 53%.

At the start of the millennium, there were 9,000 subscribed ISA accounts, but this grew to more than 14,000 in 2009.

In the meantime, the total amount invested has risen by one third (32%) to over £37 billion last year to £28 billion a decade ago.

However, the Halifax highlighted that the average amount invested per individual has dropped to £2,600 from around £3,000.

ISAs, which were launched a decade ago by Gordon Brown (who was Chancellor at that time), were introduced to encourage Brits to save without having to pay money to the tax man.

Many have turned to ISAs in the current low interest rate environment and the research from the Halifax also found that they are becoming increasingly popular with under 25s saving for a mortgage deposit.

According to the Halifax, take up for the under 25s has increased by 88% since 2000 from 605,000 to 1.1 million in 2007.

Commenting on the findings, Suren Thiru, economist at Halifax said: “It’s clear that ISAs hold an enduring appeal with savers with take up growing some 53% over its history. It’s encouraging to see that the youngest savers are also keen to benefit from the tax free status the ISA wrapper offers with growth highest amongst the under 25s.”

Last October, the total ISA allowance for people born on or before 5 April 1960 increased from £7,200 to £10,200.

For everyone else, the limit will rise from 6 April 2010.

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