New research indicates that millions of ISA savers are losing out on the best interest rates available because they have never switched their ISA provider.
Most ISA products use a high introductory rate to entice savers to use their tax-free ISA allowance with them. However, it is rare for the same ISA to maintain the highest rate or even in many cases a competitive rate.
This means unless you compare the ISA market to find the best deals and switch your investment over to a new best-buy deal, you will miss out on the best deals.
First Direct found that 62 per cent of the population who hold an ISA have never transferred the balance to another provider even though the average balance for each UK ISA holder will be more than £10,000 by the end of the 2012-13 tax year.
The research found that the main reason for not switching was that savers were happy with the current rate they were receiving, whilst a quarter had “never got round” to switching and almost ten per cent were unaware that they could transfer their ISA balance.
Young people were the most likely to have never switched with 93 per cent of 16-24-year-olds saying they had never transferred their ISA, whilst over 55’s were the most likely to have switched, though almost 60 per cent in that age group had never switched either.
Men appear to be better informed than women with almost twice as many women saying they did not know they could switch their ISA balances to another provider. More men, 17.5 per cent, than women, 10 per cent, knew that the ISA limits will increase from April 6th 2013, but this illustrates that just 82.5 per cent of men and 90 per cent of women know that ISA limits will change in the new tax year.
Andy Forbes, Head of Product at first direct said: "It's surprising that such a large number of Cash ISA savers have never switched their account and even more so that many don't realise they can transfer their balance.
"first direct have a market leading 3.0 per cent AER Cash ISA, specifically targeted at savers who've built up a tax free balance over the years and want access to a great rate for their hard-earned cash."
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