Millions of savers are missing out on hundreds of pounds each year as their cash ISA savings earn paltry interest rates.
More than £46 billion sits in nearly 6.9 million cash ISAs that pay interest rates of 1.5% or less, according to new data from Yorkshire Building Society.
The average balance of these cash ISAs is just over £6,700. Despite competitive cash ISA rates on offer, the amount sitting in these low-paying accounts has grown by £3 billion in the last year.
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The highest-paying cash ISA on the market at the moment pays an interest rate of 5.56%, meaning savers who aren’t keeping an eye on the best interest rates could be missing out on a substantial amount.
If a saver held £6,700 into a cash ISA that paid interest of 1.5% for 12 months, they could end the year with £6,800.50, earning £100.50, according to MoneyfactsCompare.
In the best-performing cash ISA (currently 5.56%), the same deposit would earn £372.52 in interest by the end of the year – creating a total of £7,072.52. This means they can get £272.02 more by choosing a market-leading account.
Savers with their money stashed away in these low-paying cash ISAs are actually losing money in real terms.
This is because inflation has not been at 1.5% or below since April 2021. The UK has experienced high inflation in recent years – peaking at 11.1% in October 2022. In the year to February 2025, prices rose by 2.8%.
The purchasing power of their ISA holdings is, therefore, being eroded as the interest savers earn is not enough to keep pace with inflation.
Harry Walker, senior savings manager at Yorkshire Building Society, said: “It’s surprising to see such a large amount still sitting in low-paying ISA accounts after a period of significant increases to savings interest in the last two years.”
He urged savers to “take action and think about how they can make their hard-earned cash go as far as possible,” adding that this is especially true as the new financial year provides a “perfect opportunity” to review ISA holdings.
Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk, echoed this sentiment: “With sticky inflation, savers that are not proactively moving to more attractive deals could stand to lose money in real terms as it eats its way into consumers’ pots.”
How can I transfer my cash ISA?
With hundreds of pounds of returns being left on the table by cash ISA holders with their money in low-paying accounts, it is a good idea to check whether you have picked the best cash ISA for your money.
Transferring your ISA is a relatively straightforward process that does not affect your annual allowance, and typically takes no longer than 15 working days.
Nevertheless, it is important to know the ins and outs of the process before you decide to switch your ISA to a better-suited provider. MoneyWeek has a full guide on how to transfer an ISA that answers the most common questions about the process.
What is the best cash ISA on the market?
The highest-paying cash ISA on the market changes often as banks are constantly competing with one another and trying to make the most attractive offer for prospective customers.
Every week MoneyWeek publishes an up-to-date list of the best cash ISAs, as well as the best fixed-rate cash ISAs on the market right now.
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