You knew life was tough for savers, but did you know things were this bad?
Cash ISAs, supposedly the cream of all savings vehicles because of their privileged tax-free status, have turned into a sorry joke.
Returns have inevitablycollapsed afternearly six years of 0.5% base rates.But some thought that banks and building societies would make a bit of an effort.
Well, they havent.
New research from independent savings advice site Savings Champion reveals that some household name banks operatecash ISAs paying just 0.1%.
Step forward, the Halifax Variable Rate Cash ISAand Santander Easy ISA, and hang your heads in shame.
To be fair to Santander, its rates do rise to 0.50%, but only if you are willing and able to save a whopping 40,000 with them.
And frankly, why would you do that?
Halifax and Santander arent the only big names offering scandalous cash ISArates.HSBC starts at a scarcely better 0.20%, while Bank of Ireland, Nationwide and Saga pay just 0.25%.
And there are plenty more offenders. In total, savers hold 12 billion in easy access cash ISAspaying less than 0.5%, with big high-street names among the worst offenders, according to the recent FCA Cash Market Study.
Loyalty Doesnt Pay
Most of these rates are offered on ISAaccounts that savers took out years ago.
Banks and building societies calculate that trusting customers wont check their rate and discover what a bad deal theyre getting.
Dont act surprised. Thats how the banks operate.
The banks arent going to change their ways, so its up to you to act
There are better rates out there, targeted at new customers.
The Post Office pays 1.50% on its easy access ISA, although this includes a bonus of 0.85% that disappears after 12 months, leaving you with just 0.65%.
Aldermore Bank pays a fixed rate of 1.85% a year for two years, on 1,000 or more.
Its better, but still abysmal.
Or You Can Get Up To 6%
So what can save you do in a world where cash ISAshave become irrelevant? The over-65s can seek solace in pensioner bonds, at least until May.
The rest will have to grin and bear it, or accepta bit more risk, by investing in stocks and shares.
The FTSE 100 is on a roll right now, inches away fromitsall-time high of 7000.
It contains plenty of top household name stocks such as BP, Royal Dutch Shell, GlaxoSmithKline, National Grid, Royal Mail, Scottish & Southern Energy and Vodafone, which are paying dividend income of between 4.5% and 6.5% a year.
Thats up to 65 times the return on cash, with potential capital growth on top.
Many older savers rightly wont want to take a chance on the stock market. The rest can no longer afford to ignore it.
If you’re intriguedby these temptingyields, you need to learn more about how dividend stocks work.
To discover the power of the dividend and how itcan make you rich, download the Motley Fool’s latest FREEwealth report How To Create Dividends For Life.
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The Motley Fool has recommended shares in GlaxoSmithKline.