Banks 'failing cash ISA savers' over monthly income

Date: 29 Jul 2010   

Banks and building societies are failing cash ISA savers that want to draw monthly income from the products, according to one analyst.

The Daily Mail's Sylvia Morris said even in the current climate of low interest rates, the tax-free accounts can generate a decent monthly income for those in retirement, yet the majority of providers only allow customers to take their interest once a year.

She added someone putting away their maximum cash allowance since 1999 in an account offering four per cent a year would have a pot worth around £50,000.

This would generate an income of around £164 a month.

Some providers do allow monthly interest on their fixed-rate ISAs, Ms Morris noted.

Chris Rhodes of Nationwide told the newspaper: "Some of our members rely on their savings to supplement their income, so we offer the monthly option."

According to financial secretary to the Treasury Mark Hoban, more than 17 million people currently hold a cash ISA account in the UK.

In April, the annual tax-free allowance for these funds rose from £3,600 to £5,100 for all savers.