Total money in cash individual savings accounts (ISAs) reached a record £49.8 billion last year, as the public continues to be lured by the highest interest rates since the 2008 financial crisis.
Bank of England (BoE) data released yesterday showed that total ISA cash savings increased by £2.7 billion in 2024 from £47.1 billion the year before. This is despite average rates falling somewhat as the Bank cut its base rate by 50 basis points to 4.75% last year.
Cash ISAs currently offer some of the highest rates on savings and investment platforms, up to or even above 5%, above the current BoE base rate. However, these may not be sustainable over the long term.
You can view our roundup of which cash ISAs offer the highest interest rates through this link. And here is a list of the platforms that offer the best interest on uninvested cash across all account types.
Hargreaves Lansdown runs a popular Active Savings service that allows customers to switch between a wide range of Cash ISA providers.
According to data from the investment platform, the largest in the UK, users overwhelmingly prefer easy access variable rate cash ISAs over fixed rate products, with 90% going to the former type of account.
Hargreaves Lansdown also noted that savings platforms dominate the Cash ISA easy access market and offer the highest interest rates. By contrast, no banks or building societies feature in the top three for rates.
The firm’s head of Active Savings Mark Hicks said that last year was an “abnormal savings market”, as easy access rates do not usually consistently outperform fixed term rates as they did in 2024.
As of the start of 2025, this dynamic still exists, but fixed rate products are still worth looking into as they offer a guaranteed return as the BoE is expected to cut rates further this year.
Providers which offer accounts with rates at or above 5% may have to cut them before the tax year ends in March, Hicks added, and are likely to be already operating them at a loss.
“Frozen income tax thresholds and no changes to the personal savings allowance have persuaded more savers to use Cash ISAs to protect their savings from tax,” he also noted.
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
You can contact Robin at robin@goodmoneyguide.com
