“With household finances being battered by the rising cost of living and frozen pay, savings are often the first casualty."
(PRWEB) February 29, 2012
• Brits are missing out on £182 billion in tax free savings by not taking full advantage of this year’s cash ISA allowance
- Only half (50%) intend to save into a cash ISA this tax year
- The average amount they will be saving is £2,784 – just over half the actual annual ISA allowance of £5,340
- 16% would sacrifice a holiday and a fifth (22%) would cut down on little luxuries to save the full ISA allowance, but a quarter (25%) wouldn’t sacrifice anything
- Over three quarters (78%) don’t have a clue how much the cash ISA allowance is this year - over a third (37%) underestimate how much they could save
- A quarter (26%) of those planning to withdraw money from an ISA this April will use the cash to clear debts.
Cash-strapped Brits are wasting up to £182 billion by not making the most of their cash ISA allowance, according to new research from uSwitch.com, the independent price comparison and switching service. Just half of Brits (50%) intend to save into a cash ISA this year  and those who do will be saving far less than the current ISA limit allows.
Those who will be saving tax-free this year intend to put away only £2,784 on average by April – just over half the annual allowance of £5,340. Nearly three in ten (29%) will put in less than £1,000 and just a quarter (25%) will take full advantage of the ISA allowance this year. And things don’t look like they will get much better next year - a third (36%) plan to save less than £2,000, even though the ISA allowance will increase to £5,640.
However, over four in ten consumers (42%) say it’s important to take advantage of the full cash ISA allowance. As a result, three quarters of Brits (75%) are willing to make sacrifices to max out their ISA allowance, with 7% willing to cut back on household essentials, 16% prepared to sacrifice a holiday and a fifth (22%) happy to cut out daily luxuries. One in ten (12%) would forgo a new car or home improvements in order to save the full cash ISA allowance. However, a quarter (25%) wouldn’t sacrifice anything.
As well as financial restraints, over three quarters of Brits (78%) don’t have a clue about how much the cash ISA allowance is this year – just a fifth (22%) know they can save up to £5,340 tax-free. More than a third (37%) underestimate how much they can save in a cash ISA – with one in ten (11%) thinking the limit is just £3,600 a year.
And savers are also in the dark when it comes to the interest rate on their ISAs – less than half (49%) know how much interest they are earning this year. More worryingly, almost half (47%) have never switched their ISA to get a better rate.
To make matters worse, as finances continue to be squeezed 15% of those who saved this year will be forced to withdraw money from their ISA in April instead of keeping it invested – a further quarter (25%) don’t know if they will be able to keep saving. Of those withdrawing money, more than a quarter (26%) will use it to pay off debts.
Michael Ossei, personal finance expert at uSwitch.com, says: “With household finances being battered by the rising cost of living and frozen pay, savings are often the first casualty. But given the current level of uncertainty, having savings to fall back on is more important than ever. And with rates fairly low, it pays to make the most of your savings by ensuring that they are tax-free.
“For a new generation of ‘need cash now’ savers, locking money away for any length of time is a big ask. However, some ISAs are instant-access, meaning you can still get your hands on your cash while benefiting from tax-free savings too. The most important thing to do before taking out any sort of savings product is to shop around for the best deal and to take out an ISA or savings plan that suits your needs. Arming yourself with the right information is the first step in winning a decent return for your hard-earned cash.”
For more information visit http://www.uSwitch.com or call 0800 093 0607
For further information please contact:
Katherine Cooper, uSwitch.com 020 7802 2961 / firstname.lastname@example.org
Rebecca Annable, Lansons Communications 020 7566 9731/ email@example.com
Notes to editors
Research carried by EasyInsites in February 2011 amongst 1046 UK adults. Assuming ONS stats, there are 48.3m adults in the UK.
1. Based on the following calculations: [(% of those with a cash ISA x 48.3 million) x (maximum allowance – average balance)] + [(% without an ISA x 48.3 million) x maximum allowance] = [(0.49x 48,300,000) x 2556] + [(50 x 48,300,000) x 5340] = 182,569,363,200 = 182.6 billion.
2. When asked “ Do you intend to save into a cash or investment ISA in the current tax year (April 6th 2011 – April 5th 2012)?” 42.3% said ‘Cash ISA only’; 7.7% said ‘Cash and Investment ISAs’; 3.1% said ‘Investment ISA only’; 46.9% said ‘No, neither’.
3. When asked How much have you or do you intend to save in your cash ISA for the current tax year?” 14.7% said ‘less than £500’; 14.5% said ‘£501 - £1,000’. The average amount was £2,784.
4. Cash ISA allowance for 2011- 2012 is £5,340
5. When asked “What, if anything, would you sacrifice in order to save the full cash ISA allowance?” 25.2% said ‘nothing – I am not prepared to sacrifice spending on other things’; 22.4% said ‘daily little luxuries e.g. cut down on eating out/ buying lunch/coffees’; 22.4% said ‘A luxury treat e.g something you would buy to treat yourself’; 15.7% said ‘a holiday’; 12.6% said ‘a new car’; 12% said ‘home improvements’; 7.1% said ‘household essentials e.g cut down on food/ heating.
6. When asked “What do you believe the maximum cash ISA allowance is for the current tax year?” 22.2% said ‘£5,340 – the correct limit. 10.5% said ‘£3,600’; 2.9% said ‘£4,280’; 3.4% said ‘£4,800’; 6.9% said ‘£5,000’; 4.6% said ‘£5,100’; 8.7% said ‘£5,250’; 6.4% said ‘£5,640’; 2.7% said ‘£5,720’; 3.7% said ‘£5,980’; 28.1% said ‘Don’t know’.
7. Of those asked “Which, if any, are reasons for why you plan to withdraw money from your cash ISA?” 25.6% said ‘to pay off debt e.g credit card bills’; 24.4% said ‘to put towards a planned cost’; 7.7% said ‘to have in an easily accessible account in case of emergency’.
8. When asked How much have you or do you intend to save in your cash ISA in the next tax year?” 8.4% said ‘less than £500’; 16.6% said ‘£501 - £1,000’; 10.7% said ‘£1,001 - £2,000’.
9. When asked “Thinking about your attitudes towards cash ISAs which of the following statement is most true for you?” 12% said ‘It’s important to take advantage of an ISA, but I can’t afford to’; 41.7% said ‘It’s important to always take advantage of the tax benefit and save the full amount’.
10. When asked “Do you know the rate of the cash ISA you are saving into for the current tax year?” 50.9% said ‘No’; 49.1% said ‘yes’.
11. When asked “Have you ever switched your ISA to get a better rate of interest” 50.5% said ‘yes’; 47.4% said ‘no’; 2.1% said ‘don’t know’.
uSwitch.com is a free, impartial, online and telephone-based comparison and switching service, helping consumers compare prices on gas, electricity, water, heating cover, home telephone, broadband, digital television, mobile phones and personal finance products including mortgages, credit cards, current accounts and insurance. In 2010 uSwitch.com celebrated ten years of saving customers money.
uSwitch.com is the first comparison website to achieve the Plain English Campaign’s Internet Crystal Mark, which is recognised as a standard that a website has clear language, is accessible and easy to use, and has been tested on a sample of its users.
uSwitch.com is dedicated to helping consumers save money whether they have internet access or not. It offers a dedicated call centre, manned by uSwitch customer service representatives, as well as a freepost ‘Send us your bill’ service, whereby customers can post their latest energy bills with their telephone number to FREEPOST USWITCH, to get a free call back from a dedicated customer services representative. The service is also available via fax, email and post. Consumers should fax 0203 214 8417, email CustomerServices(at)uswitch(dot)com or write to Customer Services, uSwitch.com, Centro 3, 19 Mandela Street, London, NW1 0DU with their postcode and usage details.
uSwitch.com is owned by Forward Internet Group Limited, a privately funded collection of internet-based businesses focused on consumer engagement and innovation.