Over a million Barclays Isa customers to suffer rate cut

6 August 2014

Barclays is shifting 1.6 million Isa customers onto a worse-paying cash Isa from November.

In order to "simplify the range" of the bank's Isa products, customers with any of 11 now 'off-sale' Isas will see their old accounts become the Instant Cash ISA Issue 1, which pays a tiered interest of between 1.29 and 1.49% AER.

However, eight of the 11 old accounts pay better rates than the Instant Cash Isa. The customers who will lose out include those with the following accounts: ISA Saver Issue 1; ISA Saver Issue 2; Golden ISA; Golden ISA Issue 2; Golden ISA Issue 3; Loyalty Reward ISA; Direct Cash ISA and Freestyle Cash ISA.

The best paying of those accounts is the Freestyle Cash ISA, which has an AER of 2.8%. The worst is the ISA Saver - Issue 1 paying 1.51% AER, which is still 0.02 percentage points higher than the new Instant Cash ISA.

The 740,000 customers of the three accounts that will see an uptick in their interest rate when the transfer happens this winter are those with a Barclays Cash ISA, a Tax Beater ISA or a Tax Haven ISA, which currently pay 0.1, 0.56 and 0.83% respectively.

Find the best Cash ISA or savings Account for you

The new account will pay 1.29% AER on balances between £1 and £14,999, 1.39% between
£15,000 and £29,999 and 1.49% on £30,000 and above. Transfers in will be allowed. Access is in branch, over the phone, online or via mobile banking.

Lee Chiswell, head of Savings at Barclays, said: "We want to simplify the way we do business with our savings customers. These changes will make it easier for our customers to understand their products, and easier for our staff to serve them. Customers will also have the added benefit of being able to transfer-in.

"We are writing to all impacted customers to let them know how these changes will affect them, and we have worked with our colleagues to ensure they can support customers who have any questions about these changes."

Which instant access cash Isas beat the Barclays Instant Cash Isa - Issue 1?

On balances up to £14,999, there are more than 30 accounts listed on Moneywise.co.uk/compare that better the Barclays rate. The top three currently are the Buckinghamshire Building Society Chiltern Gold Nuggets Issue 4 paying 2% AER, the Punjab National Bank (International) Variable Rate Cash ISA also paying 2% and the First Direct Cash ISA paying 1.85%.

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