Savers failing to switch ISA accounts once teaser rate expires

Posted on March 30th, 2011 | Categories - News

Many ISA products with introductory interest rate offers draw in savers but the majority of consumers do not switch to another account later down the line.

Consumers are attracted by temporary ISA offers promising a valuable return.

ISA savers who fail to switch to accounts with better interest rates are not making the most of their saved cash, according to a consumer watchdog.

A poll carried out by Consumer Focus found that two thirds of people who opened a cash ISA account on an introductory bonus rate did not move their money to another account once the teaser rate came to an end.

A third of the 2,012 participants said they were not sure when or if their bonus rate had run out, indicating a lack of awareness amongst ISA savers about their accounts.

A separate Office of Fair Trading report highlighted that just 11% of ISA savers switch to a new provider to ensure that they get the best return on their investment.

Oliver Morgans, financial services expert at Consumer Focus said that “sadly Isa customers have to watch banks like a hawk if they are to get the best deals”.

He continued: “With consumers getting a paltry return as low as 0.1% on some accounts, our advice to savers is to check your rate and if you are not happy, vote with your feet and switch to an Isa that pays more”.

Andrew Hagger, of financial website Moneynet, said: “The situation is that best-buy rates of 3% plus are only being taken by a certain number of people. The other people who are not checking their rates are getting a really poor deal and are subsidising the people who are getting the top rates”.

The British Bankers’ Association said: “Information about alternative products is readily available in branches, online and from a variety of other sources, including newspaper best-buy tables and comparison websites”.