By: Nadeem_Walayat


One of your New Year resolutions should be to first fully utilise the cash element of your annual ISA allowance of £3,600, especially as it is a case of use it or lose it as we march towards the end of of the current tax year on April 5th 2010. Even if you have already utilised this years allowance, savers need to ensure that they check the interest rates being paid on a regular basis, especially for those accounts that have matured as the banks and building societies are notorious for cutting rates on existing accounts and dumping matured accounts into pittance paying cash ISA accounts, paying as little as 0.1%. i.e. 1/30th the rate of a top current instant access account which on an ISA account balance of £3,600 means the difference between receiving £3.60 or £108 in interest per annum.



Interest rates will rise during 2010.

Whilst I have yet to complete my interest rate forecast for 2010, however my in depth analysis suggests that UK inflation could soar above 3% within the next few months and stubbornly stay there until the end of the year. Also that the UK economy will recover strongly during 2010.

UK CPI Inflation Forecast 2010, Imminent and Sustained Spike Above 3%
UK Economy GDP Growth Forecast 2010 and 2011, The Stealth Election Boom
This suggests that despite Bank of England reluctance to raise rates, the market will force it to do so anyway. I will complete my interest rate analysis this week which will forecast how high UK interest rates could go. But meanwhile this suggests savers should be careful not to be tempted into fixes of longer than 1 year, as it is highly probable that savings interest rates will be significantly higher by the end of 2010 despite the fact that the tax payer bailed out banks continue to rip off ISA savers i.e. similar accounts with the same provider without the ISA label tends to pay more than the ISA version therefore negating much of the aspects of the tax free savings element for basic rate tax payers.

Best Current Fixed Rate ISA's (1 Year Max)



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