Are New Cash ISA Limits All They're Cracked Up to Be?

Under new rules which came into operation on 1st July, we can all now put a maximum of £15,000 into a new ISA (NISA).  Crucially, the money can be split in any proportion between a New Cash ISA and a New Stocks and Shares ISA.  You would forgive the average man or woman on the street for automatically assuming that cash is the safest option, especially following recent financial ups and downs.  But is it?

One of the UK's leading mutual societies, Scottish Friendly, is warning savers to be wary of being drawn into holding all their ISA funds in cash.  We all know how low savings interest rates are at the moment, but did you know that many savings providers have recently lowered their already low rates for fear of overly high inflows?  Yep, worried that everyone will be throwing their cash at them the financial providers have lowered their savings rates even further!

In spite of this, current trends show that for every one investment ISA taken out, three cash ISAs are opened.  Scottish Friendly believe that much more needs to be done to educate people on the alternatives available to NISA investors.

Of course, for most of us cash is much easier to understand that complicated investment options and their associated jargon, fees, etc.

Scottish Friendly’s Director of Financial Products, Neil Lovatt, says:

"Cash is easier to understand as it offers security and access to the savings without penalty that investment ISAs do not. People are being put off by what they think is pure equity investments and instead are opting for accounts that offer poor returns on their cash."

He praises the changes introduced in the budget, which gave savers a glimmer of hope and have encouraged many people to start putting more money aside each month, but despairs at how the Cash ISA market has reacted.  Surely the opportunity to save a whopping £15,000 a year tax-free, a massive jump up from the previous £5,940, should be a bonus for us all, not an opportunity for companies to slash their savings rates!

There are many alternatives to cash savings available, so make sure you do all your research before investing your hard-earned pennies.

To find out more about Scottish Friendly products, please visit their website, or follow them on Twitter.


  1. Cash ISA rates are shockingly low. Might be good to keep some emergency cash in one, but other investments are probably better for growth.


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