UK Savings Week: Increasing interest in ISAs

This week is the UK Savings Week 2023, and internal research conducted by specialist financial services company, Shawbrook, shows an increasing interest in ISAs and an increase in the amount deposited this year compared to 2022. Adam Thrower, Head of Savings at Shawbrook shares his top three pieces of advice alongside commentary.

Shawbrook sees interest in ISAs soar

• ISA account openings have increased by 73%
• 55% increase in the amount deposited in ISA accounts in Jan – May 2023 vs 2022

New data from Shawbrook has revealed a growing trend among savers who are turning to ISAs as a shield against the threat of frozen tax thresholds. The specialist bank has seen a 73% increase during the first five months of 2023 compared to the same period in the previous year, driven by savers’ quest for more tax-efficient means of preserving their money.

Furthermore, Shawbrook’s data shows a substantial uptick in the amount of funds being deposited into ISA accounts, marking a noteworthy 55% rise from January to May 2023 when compared with last year.

Adam Thrower, head of savings at Shawbrook, said: “More people are opening ISA accounts because they’re becoming more aware of how taxes can affect their savings. With interest rates going up, using ISAs to save money while paying less tax is a smart choice. People should now carefully think about what type of savings accounts they use and what interest rates they offer to make sure it matches their money goals. It’s also important to check on older ISAs sitting in accounts that don’t earn much interest. Moving these to newer accounts with higher interest rates could make you earn hundreds or even thousands more money every year. But remember, if you’re thinking of moving old savings to new accounts, follow the instructions from the account provider to make sure you stay within the tax limits for the current year.”

Adam’s advice:

1. Assess your personal finance goals

Consider the increase in interest rates and your personal saving allowance (PSA) and assess whether your savings could surpass the limit. By exceeding the PSA, you are effectively slashing your interest rate. An ISA account will allow you to save up to £20,000 tax free per year allowing you to benefit fully from the high rates.

2. Identify the best account for you

The variety of ISA types may seem overwhelming. Not to worry, with adequate research you’ll find the account type most suited to your savings goals. Think about your financial behaviour and which type of ISA will accommodate it the best. If there’s a possibility you may need to withdraw funds for a rainy day, consider opening an Easy Access Cash ISA which allows you to make as many withdrawals as necessary.

3. Don’t be put off by a lack of high street presence

Many of the leading savings providers do not have a high street presence and so, by limiting yourself to a ‘big name’ or only a bank with high street branches, you’re limiting your potential earnings. If the bank you’re interested in is protected by the FSCS and is offering a rate that is much better than your current rate, then make the switch.

_Methodology

_{New cash ISAs opened in FY 2021 v FY 2022 (Shawbrook internal data)}

_{1March-December 2021 V 2022}