Scots savers failing to take advantage of ISAs

Bank customers favour standard savings accounts rather than ISAs to store smaller sums of cash, according to research.

When savers were asked where they would deposit £5,000, 44% would choose an ISA compared with around one in seven who would choose a standard savings account (13%).

But less than a fifth would save £100 in an ISA (18%), where interest on deposits is not taxed.

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Bank of Scotland published the results of a survey on the eve of the April 5 tax year deadline for putting cash into ISAs.

Savers can deposit up to £5,640 for the 2012-13 tax year until tomorrow. The threshold for 2013-14 is £5,760.

The average ISA balance in Scotland is £1,833.70.


Almost a third of ISA account holders (29%) are simply putting money aside for a rainy day, one in six are saving for retirement (16%) and about one in 10 are saving for a holiday (9%).

Around three in every five (58%) did not withdraw money from their ISA in the last tax year. Of those who have, the average withdrawal amount was £674.90.

Andy Bickers, director of savings at Bank of Scotland, said: “ISAs should absolutely be the number one priority for all savers, whether they have a larger sum or even if they only have £1 to save.

“Adding little and often will soon build up over time and it’s even more important that these savers with smaller pots turn to their tax-free allowance first to make the most of their savings.”

The priorities of those who save smaller sums are having easy access to cash, being able to pay in to the account regularly and online banking, according to the bank.

Lump sum

When saving a larger amount, the tax-free element is most important to bank customers, followed by the interest rate.

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Two-fifths mainly pay money in whenever they can and the amount varies (39%), while one-fifth tend to put a lump sum into their ISA at the start of the tax year (19%).

About one-sixth (15%) started regularly paying money into their ISA at the start of the tax year but were unable to continue doing so. A further 10% save a fixed amount on a regular basis.

The survey of 179 people in Scotland was conducted online by Populus between March 6 and 8.