Cash ISAs with high interest rates could be a scam – here’s how to tell

Cash ISAs with high interest rates could be a scam – here’s how to tell
Individual Savings Accounts (or ISAs) can be a great way of saving money, but those looking to invest are being warned to be wary of cash ISA scams that are promising a high level of interest (Photo: Shutterstock)

Individual Savings Accounts (or ISAs) can be a great way of saving money, but those looking to invest are being warned to be wary of cash ISA scams that are promising a high level of interest.

A recent investigation by The Times has revealed that some adverts for Cash ISAs on Google are offering extremely high interest rates.

Some of these adverts are offering rates of up to 9 per cent, when current Cash ISAs are usually around 1.6 per cent.

Too good to be true

Every day for two weeks, the newspaper monitored the companies that appeared when Googling ‘top-rate’ ISAs.

By doing so, they found that the names that appeared at the top of the list were unknown companies with ‘AD’ next to them, indicating a paid for advert.

The Times alleges that these companies promised high returns that they wouldn’t be able to meet, in exchange for people’s money.

Several of these companies also told readers that the ISAs were “safe” and “secure”, and wrongly claimed to be regulated or protected by the Financial Services Compensation Scheme.

The newspaper also reports problems with adverts for fraudulent Stocks and Shares ISA providers.

Anna Bowes, co-founder of savings site Savings Champion, told The Times, “These companies should not be allowed to advertise products using words such as ‘safe’ and ‘secure’, when they are not Cash ISAs. It is misleading.

“In many cases with these websites you just don’t know where your money is going.”

What should I do if I think I’ve been scammed?

If you think you’ve been the victim of a bank transfer scam, you should firstly contact your bank or card provider in order to notify them of the fraud. You should do this as soon as you possibly can.

You should then report the crime to Action Fraud either online or by calling 0300 123 2040, as well as keeping an eye on your credit reports for any suspicious transactions.

In order to avoid falling victim to scams, you should decline any unsolicited offers, and keep checking the FCA Warning List of firms that you should avoid, by visiting: fca.org.uk/scamsmart/warning-list

ISA
Easy access cash ISAs allow you to withdraw money whenever you want, whereas fixed rate cash ISAs give you a guaranteed interest rate, but lock funds in for a set amount of time (Photo: Shutterstock)

What is a cash ISA?

Moneysavingexpert.com explains that “Cash ISAs are just savings accounts you never pay tax on.

“Everyone in the UK aged 16 or over gets an ISA allowance at the start of each tax year – for the 2019/20 tax year that ends on April 5, it’s £20,000.”

The money advice website also explains that there are a variety of different cash ISAs, including easy access and fixed rate ones.

Easy access cash ISAs allow you to withdraw money whenever you want, whereas fixed rate cash ISAs give you a guaranteed interest rate, but lock funds in for a set amount of time.

This article was originally published on our sister site, Yorkshire Evening Post.