Savers can still find a good deal before the tax year ends
Disappointed savers are struggling to find good savings deals as rates plummet during Isa season, according to new figures.
Since the beginning of March, the average rate on an easy access Isa has fallen by 0.03%, while average notice Isa rates have fallen by 0.04% during this same period, according to Moneyfacts.
The average one, two and five year fixed Isa rates have fallen by 0.09%, 0.12% and 0.18% respectively since 2 March.
The table below shows how Cash Isa rates have fallen since the beginning of the month:
|Date||Easy access Isa||Notice Isa||One year fixed rate Isa||Two year fixed rate Isa||Five year fixed rate Isa|
|2 Mar 2020||0.83%||1.13%||1.14%||1.18%||1.47%|
|9 Mar 2020||0.84%||1.13%||1.13%||1.19%||1.46%|
|16 Mar 2020||0.83%||1.13%||1.13%||1.14%||1.45%|
|23 Mar 2020||0.81%||1.12%||1.07%||1.10%||1.44%|
|30 Mar 2020||0.80%||1.09%||1.05%||1.06%||1.29%|
Traditionally Isa season occurs in March each year to mark the transition from one tax year to another on 6 April.
Providers tend to increase Isa rates during this period to compete to sign up new savers, though in recent years that has been lessened.
Why have Isa rates fallen?
Isa rates have fallen due to two consecutive cuts to the base rate made by the Bank of England (BoE) to protect the UK economy from the coronavirus crisis.
Base rate is factored in to the interest levels banks pay savers, and cuts to this are almost always passed on in full.
These cuts, coupled with uncertainty about the economy, have made providers reluctant to launch new competitive Isas this month or increase rates on existing deals.
Where can you find the best Isa rates?
Savers hoping to find competitive Isa rates may still be able to get a good deal if they are willing to lock their money away.
Currently, the five-year fixed rate cash Isa offered by Paragon, pays the best rate overall of 1.6%.
Inflation fell from 1.8% in January to 1.7% in February, according to the latest Consumer Prices Index, meaning even the best Isa on the market cannot currently beat this rate.
In real terms, this means the spending power of the cash held in the account is less than the interest it will earn.
However, economists expect inflation will fall further in the coming months due to consumers spending less because of coronavirus isolation.
Al Rayan Bank’s two-year fixed rate Isa pays 1.5% expected profit rate (EPR), which could be an option for savers not looking to lock their cash away for so long.
The Islamic bank pays EPR instead of interest for religious reasons, and this is technically not a guaranteed rate. However, no Islamic savings deal in this country has ever failed to pay the advertised rate.
The best one-year fixed rate Cash Isa is from Virgin Money, paying 1.36%.
While easy access accounts generally offer low interest rates, they give savers more flexibility to withdraw their cash.
The best easy access Isa rate is offered by Al Rayan Bank, which pays 1.36% EPR.
Eleanor Williams, finance expert at Moneyfacts.co.uk, said savers should still look for the best available returns.
Williams says: “Although rates have been falling this last month, for those willing to shop around and keep a close eye on the top rate tables, there are still some competitive options available.
“Savers may want to consider some of the challenger banks and less familiar brand names or, if they are able to play a long game and are happy to lock their funds away into a fixed rate Isa for a period of time, then these are an option to secure the highest available returns."
For more information and advice check out our guide on the best Cash Isa rates.