The average cash ISA interest rate soared to 0.91% at the start of 2018, an increase of 0.55% on the previous month.
New data from the Bank of England, published in The Money Charity’s February Money Statistics reveal that cash ISA interest jumped to 0.91% in January 2018. The last time average cash ISAs reached such a level was in May 2014, where it stood at 0.93%. Last year, interest rates were at their lowest since the Bank of England began measuring the rates in 2011. It is also the single biggest jump in Cash ISA interest over the space of a month since records began in 2011. The average cash ISA has seen a growth of 0.55% on December last year and of 0.64% on last quarter. This comes as the Bank of England continues to focus on slowly increasing the Bank of England base interest rate over the next year. The base rate increased to 0.5% in November 2017, and whilst it remained the same in February 2018, the Bank has warned that rates will rise faster than it had previously anticipated. As the Bank takes aim at stubbornly high inflation rates, which remain at 3.0% for January 2018, many economists predict the base rate will rise twice this year. This is also partially due to the UK economy growing faster than forecasts predicted, rising by 0.5% in the last quarter of 2017.
Michelle Highman, Chief Executive of The Money Charity says: “The jump of 0.55% in Cash ISA interest rate is great news for those looking for a safe return in their savings, who have been put off by low-interest rates for the past few years. It is good to see that people with savings habits will be rewarded with a higher return on their ISA investments, and those without such habits now have more of an incentive to do so. We will be keeping a close eye on how further increases in the base rate rise develop over the next year, and how it will affect savers and those in debt as well.”
Other key points from the February Money Statistics:
- 0.5% UK economy growth in Q4 2017
- 13% decrease in gross mortgage lending in December 2017
- The average annual interest repaid by UK households in 2017 was £1,865
Get the full picture and many more fascinating facts about money in the UK in our monthly Money Statistics.