Don't wait until the last minute to choose your ISA

2 April 2012

People should not wait until the last minute to put money into an ISA, the Financial Ombudsman has warned.

Savers and investors have until Thursday 5 April to put this tax year's allowance into a cash ISA or stocks and shares ISA. For the 2011/12 tax year the annual limit is £10,680 while in the next tax year it will rise to £11,280.

The Financial Ombudsman Service says many of the complaints referred to them involving cash ISAs are where the saver tries to deposit cash into the ISA near the end of tax year, but the ISA provider is unable to carry out their instructions in time.

"In these cases, the consumer was unable to use their ISA allowance (or part of it) for that particular tax year - and could be disadvantaged as a result," says Natalie Ceeney, the chief ombudsman.

Extended hours

However, some companies are keeping their branches open and call centres open longer to help ease the rush of last-minute ISA money that is expected.

Halifax is extending its opening hours in branches in England and Wales to 7pm from 2 April to 5 April.

Bestinvest is extending its deadline for online stocks and shares ISA contributions to 11.59pm on 5 April, and to 10am on 5 April for postal contributions.

Research by Virgin Money shows that more than three times as many cash ISAs are opened each year compared with the stocks and shares versions.

The best rate on a cash ISA currently comes from AA Savings and Cheshire Building Society, which both pay 3.5%.

However, with interest rates expected to remain at 0.5% for the next few years, savers willing to take some risk and that are saving for the long term should consider using some of their allowance in a stocks and shares ISA.

Scott Mowbray at Virgin Money comments: "Adopting a mix and match approach using both cash and stocks and shares ISA allowances, depending on what you are saving for and what you can afford, can help you get the balance right between rainy day money and saving for the future."

This article was written for our sister website Money Observer

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