Average Cash ISA to earn £12 interest over next year

The average Cash ISA from the UK’s top ten banks will earn just £12 in interest over the next year, new analysis from RateSetter has revealed.

The peer-to-peer lender highlighted the challenge facing savers looking to grow their money in a Cash ISA, particularly as the coronavirus pandemic progresses.
 
Ratesetter revealed that the average amount saved in a Cash ISA is £5,114, according to HMRC figures, and suggested that if this amount was held in the average Cash ISA with one of the UK’s ten biggest high street banks – which on average pay 0.24% for their instant access products – it would earn £12.27 interest in a year.
 
While the interest rate offered by the ten biggest banks is slightly better for savers willing to lock in their money for two years, at 0.61%, RateSetter said it would still provide just £31 per year for the average Cash ISA, with penalties for early withdrawals.
 
RateSetter CEO, Rhydian Lewis, commented: “Cash ISAs provide certainty on the returns they deliver – but with interest rates closing in on zero, this essentially guarantees your money will fall in value once inflation is factored in.
 
“However, people should not give up on the prospect of growing their money in the coming year. There are still inflation-beating ISA investment options out there which offer shelter from the turbulence of the stock market, such as the Innovative Finance ISA.”

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