ISAs 'becoming unpopular'

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Monday, 16 Feb 2009, 10:00am

Customers are withdrawing cash from ISAs bacause of the credit crunch, according to recently published research.

Individual savings accounts ISAs are becoming increasingly unpopular as interest rates are falling and cash-strapped consumers are withdrawing their funds, according to research released recently.

Price comparison site uSwitch.com conducted a survey which found that 38 per cent of consumers are planning on withdrawing their money from cash ISA accounts.

The site found that more than half of these people cited falling interest rates as the primary reason for scrapping their savings accounts, while 18 per cent said they needed extra money.

Rumina Hassam, personal finance expert at uSwitch.com, said: "There is no getting away from the fact that savers have been the sacrificial lambs of the plummeting base rate."

The Bank of England has reduced the base rate to one per cent in recent months, in an attempt to make mortgage lending cheaper for individuals.

However, many organisations, including Legal & General, claim that the negative impact the cuts will have on savers outweighs the potential benefits for borrowers.

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