Tax-free savings accounts set to lose thousands as inflation keeps climbing

Charles Incledon, Client Director quoted in City A.M. 17th September 2021

The average interest rate on a cash ISA rate is currently 0.31 per cent, per the Bank of England on 31 July, while the rate of inflation is now 3.2 per cent.

At these rates, £20,000 in a cash ISA will gain £312 in interest over the next five years whereas it would gain £3,465 if it kept pace with inflation.

This means that £20,000 put in a cash ISA today would lose 17 per cent of its value in real terms over the next five years as its purchasing power decreases.

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