UK Savings Week: CapitalRise chief urges adults to consider ISAs
With UK Savings Week starting today (18 September), Uma Rajah, chief executive and co-founder of property investment firm CapitalRise, has called on UK adults to utilise ISAs for their financial planning.
ISAs allow individuals to save or invest up to £20,000 per tax year through a personal savings allowance, with the returns being exempt from tax.
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Rajah (pictured) said that ISAs are a great asset when it comes to financial planning and noted recent CapitalRise research which found that just one third of UK adults understand the tax benefits of the product.
“Additionally, high and rising interest rates means that there are improved rates on ISA savings, as borrowing becomes more costly, allowing the opportunity for greater returns,” Rajah added.
“Despite these benefits, 46 per cent of UK adults did not put money into an ISA over the last tax year. This underutilisation stems from a lack of awareness of ISA potential, with many individuals unsure of the different ISA types and how they work.
“UK Savings Week is a critical reminder to explore and talk about the savings options available to us, including cash ISAs, stocks and shares ISAs, Lifetime ISAs and the Innovative Finance ISA to discover which works best when it comes to hitting personal and long-term financial goals.”
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An estimated £25bn to £35bn is currently sitting in fixed rate accounts that will mature over the next six months, according to Hargreaves Lansdown.
If £35bn is rolled over into easy access accounts paying two per cent, this could lead to £1.5bn in interest being lost (compared to fixing for a year at 6.2 per cent), Hargreaves Lansdown said.
“Relentlessly rising Bank of England rates, and a flurry of competition from smaller and newer banks and building societies, means you can currently fix over one year at around six per cent or more,” said Sarah Coles, head of personal finance at Hargreaves Lansdown.
“However, when fixed rates mature, there’s the risk that we forget to do anything about it. In many cases, when your rate comes to an end, a fixed rate deal will roll over into a far less rewarding easy access account – or back into the account you paid in from. If all the maturing money did this, we could miss out on an estimated £1.5bn in interest.
“It means it’s well worth taking the time now to check when your fixed rates mature, and make a note to act immediately, to lock in one of the great rates around at the moment.”
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