Paragon Bank’s Director of Savings Derek Sprawling writes that as interest rates have risen, savers should consider tax-free ISAs again.

It’s hard to look at the news and not see another set of concerning economic statistics.

Economic challenges are likely to dominate the year ahead and interest rates will be front and centre of the effort to tackle them.

Starting the year at 0.5%, the Bank of England’s Monetary Policy Committee has since consistently increased the Base Rate and is expected to continue doing so into next year.

Savers have not seen such rapid change in interest rates since 2008 and are now facing a very different situation in selecting the right financial products for their circumstances. For example, given the increase in interest rates, the balance required for a saver to start paying tax on their interest has reduced significantly.

Taking a fresh look at ISAs

Recently released data by CACI, which compiles savings deposits data from thirty leading financial service providers, found that while the overall pot of savings is still slowly growing, the total value held by UK savers in ISAs is decreasing.

Overall, ISA deposits started the year at over £264 billion, but that has since fallen by over £7 billion.

While not a dramatic shift, the figures do though highlight that savers are underutilising a product that could potentially provide them with tax benefits.

Types of cash ISA available

Savers can choose between a range of cash ISA products, including Access, Fixed-Rate and Lifetime ISAs.

Fixed-rate ISAs require the saver to commit their money for a set period, typically for one, three or five years, although other time periods may be available. The longer you commit your money for, usually the better the rate.  

Paragon’s ISA products are available in Paragon’s ISA Wallet which can help those savers looking to create a portfolio of cash ISAs to meet their individual circumstances.

The ISA Wallet allows savers to spread their £20,000 annual ISA allowance with Paragon across multiple cash ISAs, rather than just open one specific account.

At Paragon, we remain committed to supporting savers see a valuable return on their savings – and our ISA products are a key component of our doing so.  

Visit our Savings webpage to view our latest rates.