Cash ISA rates lose their allure

Cash ISAs that were offering savers attractive returns just a few weeks ago are now being pegged back to lower interest rates.

Despite the fact that the Bank of England held the base rate at 0.5 per cent for the third consecutive month in June, several banks and building societies are cutting the rates on a number of ISA deals or withdrawing them altogether.

Andrew Hagger of Moneynet.co.uk said: “We’re only two months into the new tax year, yet some of the more attractive cash ISA accounts have, in the last seven days, either had their rates slashed or been withdrawn completely.”

Mr Hagger suggested that some providers may have reached their targets for ISA deposits already and are happy to offer a poorer deal to those who have been slow off the mark.

He added: “So if you haven’t invested your ISA cash for 2009-10, even though there are still 10 months still to run in this tax year, it may be prudent to make your choice sooner rather than later, before some of the other top deals disappear too.”