April was boom time for cash Isas

Frustration over low savings rates fuelled a 50 per cent surge in deposits into cash Isas last month, as savers looked for better returns.

Monthly figures from the British Bankers’ Association (BBA) showed £7.5 billion was placed into accounts at the peak of the Isa season.

Low interest rates and high inflation have made the tax advantage of Isas more attractive, although there is a limit of £5,640 each year.

Comparison website Money-facts recently said more than 120 Isas beat inflation, compared with just over 30 non-Isa accounts, all of which are fixed-rate bonds.

Moneyfacts spokeswoman Rachel Springall said that as well as the tax-free status of Isas being a big pull for customers, competition among banks to attract savers has been particularly strong this year, with savers needing to rush to snap up the best deals.

Ms Springall said: “Isa season has been prominent, with some of the best buys lasting for only two or three weeks at the most.

“There has been quite a lot of competition and these deals will have been at the forefront of people’s minds. They are starting to be withdrawn and replaced with lower rates.”

The Isa boost helped personal deposits to rise by 3.9 per cent, with £666.4bn held in personal deposits and savings, the BBA said.