Top Up Your Cash ISA Early and Maximise Interest Earned

By: Nationwide

Savers could earn an additional £103 million1 by topping up at the start of the tax year Nationwide Building Society estimates that people with an Individual Savings Account (ISA) could be better off by an additional £103 million by using their annual tax-efficient allowance at the beginning of the tax year, rather than at the end. This figure will increase in October, when savers aged 50 and over will be allowed to increase the amount they pay into their ISA.

The new tax year started on the 6 April and also marked the tenth anniversary of ISAs. The current ISA rules2 allow people to save up to £3,600 in a cash ISA, with the balancing amount up to £7,200 in a stocks and shares ISA. The overall ISA annual savings limit is £7,200 per tax year.

To get the most out of an ISA, Nationwide advises savers to not only fully utilise their annual tax-efficient allowance, but also to top-up their ISAs as early into the tax year as possible or to make regular contributions throughout the year.

Nationwide offers a choice of instant access, tracker or fixed rate cash ISAs. The Society’s fixed rate ISA bond range paying up to 3.25% includes terms from six months to four years, giving savers a wide choice to suit a range of needs. In addition, with effect from Monday 27 April 2009, customers wishing to transfer their cash ISA to the Society from another provider will be able to choose from its three year Fixed Rate ISA Bond (currently paying up to 3.25%) or its four year Fixed Rate ISA Bond (currently paying up to 2.75%).

For those interested in stocks and shares ISAs, Nationwide also offers a wide choice of 17 investment funds that are provided through Legal and General, where customers receive advice on the products from Senior Financial Consultants in Nationwide branches.

Setting money aside is particularly important given the current economic climate. Research3 from Nationwide reveals that just 24% of people think they are saving about the right amount and 60% of consumers admit they are saving less than they need to. Making use of an ISA is a good way to get into a savings habit, as they are tax-efficient compared to ordinary savings accounts. In fact, an ISA that has been fully subscribed since 1999 could be worth £39,588.134 by now, saving over £2,0005 in tax.

Lee Raybould, Nationwide’s head of savings , said: “The UK’s savers could receive £103 million more interest from their ISAs if they top up early in the tax year. Our latest research shows that three in five consumers think they are saving less than they need to, so savers should consider topping up their ISAs early to see it grow to its full potential.”

http://www.nationwide.co.uk/

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