20 Feb 2018 New research from Charter Savings Bank shows Cash ISA savers are missing out on transferring their accounts to gain more competitive rates and increased flexibility because they value convenience over better returns and fear the transfer will be too complicated.
The research indicates that half of Cash ISA savers aged 55-plus have never moved their accounts to another provider, with more than two out of five (43%) saying they don’t transfer their savings because they want all their money in one place.
However, nearly one in 10 say they have never transferred because they think the switch will be too complicated, while 42% believe they will not be able to secure a more competitive deal.
HMRC data shows around 10.3 million over-55s have money in Cash ISAs, with around 3.9 million opening new accounts each year. Under current ISA rules, most providers only allow savers to deposit their annual allowance into one type of Cash ISA account per year, limiting options for savers.
Charter Savings Bank is offering more choice with its Mix & Match ISA platform, enabling savers to spread their annual allowance within multiple Cash ISAs.
Most providers only offer a Fixed Cash ISA or Easy Access Cash ISA as an option to their customers and lock them in, whereas the Mix & Match ISA gives the customer flexibility.
With the Mix & Match ISA, customers don’t have to put all of their annual allowance into one single Cash ISA. They could for example open an Easy Access Cash ISA with £5,000 and then the following month deposit £10,000 in a 1 Year Fixed Rate Cash ISA product. If they have more money available they could open a third Cash ISA product using the remaining £5,000 of their annual allowance.
Charter Savings Bank has also adopted the industry’s ELSA system to ensure most savers switching will benefit from a quick and simple transfer.
Its research shows the main motivation for transferring Cash ISA accounts from their existing provider is a rate reduction: 51% of over-55s who have moved said they switched because of a reduction.
Just 35% of over-55s say they always assess the Cash ISA offers each year and move if they find a better rate, while one in three (33%) say they move when the fixed rate term on their Cash ISA expires.
Charter Savings Bank’s research found the age group most likely to transfer Cash ISAs are those aged between 25 and 44 – around 62% of them have switched their Cash ISAs.
Paul Whitlock, Director of Savings, Charter Savings Bank says: “Transferring Cash ISA accounts is a straightforward process, now that the industry has signed up to new standards and is utilising new technology and systems.
“People regularly shop around for more competitive deals on a wide range of goods and services, and that should also be the case in the Cash ISA market. Those who don’t move are risking missing out on more competitive rates, greater flexibility and access to their savings when needed.
“The Charter Savings Bank Mix & Match ISA provides flexibility for savers and enables them to split their allowance across multiple accounts, all with competitive rates.”