As crazy as it sounds, there are millions of pounds sitting in forgotten cash ISAs. The Telegraph recently submitted a Freedom of Information request to National Savings and Investments (NS&I), which revealed that more than £217 million is waiting in dormant cash ISAs that were opened with the government-backed bank.
The NS&I considers an account dormant if there have been no transactions within it for 15 years. There’s an average of more than £5,000 in each dormant account, and they’re all continuing to earn interest, though potentially not as much as they could be.
If these accounts continue to be dormant without contact from the owner, they are at risk of being transferred to a residual account. Residual accounts typically have much lower interest rates. The latest figures show over £650 million is being held in the NS&I’s residual accounts.
Are you potentially sitting on thousands of pounds in a forgotten about account?
Access the NS&I dedicated Tracing Service here.
What is a cash ISA?
In 2006, the NS&I launched its Direct ISA (individual savings accounts) with an initial tax-free interest rate of 5.05%. Of course, thousands of people chose to open an account and make the most of this government-backed savings option. But, over the years, it appears that many people have done nothing with their money since.
Cash ISAs allow you to save up to £20,000 per year without paying any tax on the interest it accrues (dependent on ISA rules). You don’t have to give any notice to take money out of these accounts, and there are no penalties when accessing your funds. You can open a cash ISA with as little as £1 as long as you are a UK resident and over the age of 18.
The money you put into a cash ISA remains held as cash, not invested in the stock market, so it’s a very low-risk savings strategy. Interest from cash ISAs also does not count towards your standard personal savings allowance (PSA), saving you a little on your tax bill each year.
Want to talk about your savings?
A cash ISA remains a very attractive way to save your money if you are wanting a stable, low-risk strategy. If you’d like to talk about the best savings plan for you, get in touch with our independent financial advisers in York.
We can help you understand the different savings options available to you to make sure you’re getting the best returns on your money. You might be planning for retirement, wanting to save for your children’s future, or have a particular savings goal in mind. We’re here to help you achieve your money goals.