Isas still make sense

by Ed Bowsher on 31 March 2010  |  0 comments
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A super-complaint has been launched today about the ISA market. The move is understandable because the ISA market is far from perfect. But it's still well worth taking out an ISA.

An organisation called Consumer Focus has launched a 'super-complaint' to the Office of Fair Trading about the cash ISA market.

The heart of the complaint is that transferring ISAs between providers is a long-winded and boring process. The banks then exploit these difficulties by luring savers in with high launch rates for Cash ISAs, and then massively reducing those rates after a year or so. This means that many savers don't move their cash and end up receiving derisory rates of 1% or less.

It's a fair point - the transfer process can take up to a month and savers will lose interest for most or all of that period. But that doesn't mean savers should give up on ISAs. For example, you can currently transfer your cash to the Nationwide e-isa and get 2.75% interest. If you're only receiving 0.5% at the moment, it's well worth making the transfer - even if you lose interest for short period.

I wish the super-complaint well, but even if nothing changes in the end, don't give up on ISAs!

 More: The best ISA for every budget