With the ISA deadline looming a consumer group has revealed that British savers are failing to switch ISAs in search of a better deal.
In the same way car insurance companies offer fantastic deals for new customers, which magically vanish as soon as your renewal letter comes through the door, ISA companies offer deals to entice new customers, which after a year are taken away.
Where the country has got smart with car insurance, and many switch each year, ISA customers are notoriously loyal, and the Consumer Focus survey found that two thirds of people who opened an ISA which had an introductory offer, then failed to change products, once that offer had run out.
One in four of those savers hadn’t even realised that the account had an introductory bonus, and thus had no idea when it ran out.
They also found that a third of all UK savers also hadn’t changed ISA product for five years, despite the fact many would have benefitted from better rates if they’d changed product.
Oliver Morgans, who is an expert from Consumer Focus added, “Around one in three of us has a cash ISA so millions of people are likely to be losing money by not switching when their bonus rate ends.
“Unfortunately, it seems that banks use higher interest rates to lure customers in and then aim to cash in on their customer’s inertia.
“Sadly, ISA customers have to watch banks like a hawk if they are to get the best deals. With consumers getting a paltry return as low as 0.1 per cent 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.” The group lodged a super-complaint with the Office of Fair Trading about the cash ISA market last year, calling for the process of switching an ISA to be made quicker and easier, as well as for pricing structures to be more transparent.
The banks have now agreed that they will start printing interest rates on their customers’ statements, as well as promising to complete an ISA transfer within 15 days.