M&S Bank closing top Cash ISA to new customers
The market-leading Advantage Cash ISA will be withdrawn from the 21st January.
M&S Bank has announced that it will no longer be accepting new applications for its market-leading Advantage Cash ISA from Monday 21st January. It’s also dropping the interest rate on offer from March.
The Advantage Cash ISA currently pays an interest rate of 2.75% AER. It’s the top instant access Cash ISA, both in terms of ISAs for this tax year and those that offer the transfer in of previous years’ ISA savings.
It’s another blow for savers at a time when top Cash ISAs are regularly being closed to new customers. Teachers Building Society confirmed to us that it is withdrawing its Cash ISA Reward to new customers, which was also in the upper echelons of the best buy tables as it is paying 2.65%.
If you want to apply for the M&S Advantage ISA you need to make sure your application reaches the bank by Monday 21st January. But you should note the variable interest rate on the ISA is to be cut to 2.25% from 6th March. It was cut from 3% to 2.75% as recently as December.
M&S told us: "All of our savings products are limited offers and as such our Advantage Cash ISA will close to new business."
What's causing these Cash ISA cutbacks?
As well as limited offers, the Government’s Funding For Lending scheme has been blamed for the reduction in interest rates and closure of accounts to new customers across many savings products. The scheme, designed to kickstart the housing market, offers banks and building societies the chance to borrow cheaply from the Bank of England with the aim that they will then lend more to mortgage borrowers.
However, this cheap borrowing means financial institutions don’t need to attract as many savings deposits, which traditionally funded much of their mortgage lending. As we reported in December, 350 top savings accounts disappeared over the course of 2012.
Since September, the top interest rate for an easy access Cash ISA for this tax year has fallen from 3.06% to 2.75%.
Earlier this week, online savings platform Governor Money, which allowed customers to save in several Cash ISAs from one account, announced it is closing to new business. It blamed the “scarcity of products” following the launch of the Funding For Lending scheme.