Ewan Edwards, Head of Savings at Alliance & Leicester says: “Our survey reveals money matters have a firm place at the forefront of people’s minds at the moment. So much so, that people are now discussing financial related issues more than sport or politics. Nevertheless people still aren’t getting all the benefits they could from their savings, with only half of those with savings getting the extra benefits that come with sheltering their savings in an ISA.”
Alliance & Leicester Savings’ research also found that among those who do have savings, many aren’t making the most out of them: over half (52%) leave money they’ve allocated to save sitting in a current account and worryingly six percent even keep their savings in cash. And as the ISA (Individual Savings Account) season starts to get underway, research reveals that tax efficient ISAs are still not being taken full advantage of, with just half (51%) of savers having a cash ISA.
The research also discovered that 80 per cent of savers are still quoting a good rate of interest as being one of the three most important factors they look for when choosing a savings account, with just 42 per cent citing tax efficiency as a key factor. Yet the two often go hand in hand.
Alliance & Leicester Savings found there are still quite a few misconceptions about ISAs amongst those who haven’t got one:
- Just under a third (31%) say they don’t have a lump sum to invest so believe ISAs are ‘not for them’.
- Just over a quarter (26%) say the reason they haven’t applied for an ISA is because, although they think saving is a good idea, they want to be able to access their money.
- And one in eight (13%) either don’t know what they are and so are unsure why they would want one, or, don’t know what they are but think they sound very complicated.**
Ewan Edwards concludes: “It’s concerning that people think you need a lump sum to start an ISA, when you can save from as little as £1. And whilst the idea is to use the tax-allowance to build up a lump sum, there are plenty of cash ISAs available that give you instant access to your money. It’s time for an end to confusion and for people to make the most of whatever they can save – and not be put off by the idea that it’s overly complicated.
“When choosing a deposit account, the first priority should be to make the most of tax-efficient savings schemes, so a cash ISA should really be people’s first port of call.”
* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,959 adults. Fieldwork was undertaken between 18th - 21st January 2008. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
** 6% of respondents said the reason they haven’t applied for an ISA was because they don’t what one is so aren’t sure why they’d want one. 7% of respondents said the reason they haven’t applied for an ISA was because they weren’t sure what an ISA but thought it sounded very complicated.