ISA savers issued £416 warning as millions could be leaving money on the table | Personal Finance | Finance

With the new tax year underway, millions of savers will be looking where to put their new £20,000 ISA allowance, but don’t overlook your existing Cash ISAs either.

Loyal savers risk missing out on as much as £416 a year by sticking with closed accounts paying inferior rates, new research from Moneyfactscompare.co.uk shows.

Banks and building societies typically reserve their best rates to attract new customers, leaving existing ones to lag behind the market.

Moneyfacts personal finance analyst Caitlyn Eastell warned: “Millions could be missing out on hundreds of pounds each year by leaving their money in older, underperforming cash ISAs instead of switching to the most competitive accounts on the market.”

A saver with £20,000 in an average closed easy access ISA currently earns just £498 a year, compared to £914 from a top-paying deal, she said. “Savers can’t afford to miss out on that kind of money, given today’s financial pressures.”

Transferring an ISA preserves its tax-free status and doesn’t eat into the current year’s allowance.

However, you need to do it properly. Contact your new chosen provider, who will complete the transfer on your behalf. “Withdrawing funds and re-depositing them could mean losing ISA tax benefits,” Eastell said.

Also, examine your new account carefully. Some headline rates may be inflated by introductory bonuses that won’t last, while a handful pay a lower rate on transferred balances.

Don’t just review your Cash ISAs. Skipton Building Society found that £327 billion is parked in current accounts, where it earns no interest at all. They’re missing out on £14 billion in interest compared to switching the money into its Cash ISA, which pays 4.3%.

Skipton head of savings Alex Sitaras said just one in eight check their current and savings accounts every year to make sure they’re getting the best possible rates. “You need to review your savings regularly.”