More than £50 billion sitting in ISAs paying less than 2%

There’s still time to check your savings are working hard enough for you.

While savers have been taking advantage of their ISA allowance this tax-year, many could be maximising the return on their hard-earned cash.

More than £52 billion is sitting in instant access adult cash ISAs earning interest of 2% or below, according to analysis of CACI data by Paragon Bank. This total is split between 7.2 million accounts, with each account holding an average balance of approximately £7,252.

Concerningly, 1.6 million accounts have more than £10,000 earning less than 2% interest.

There’s little reason why savers should be settling for such a low interest rate, as the average easy access ISA rate stood at 3.00% on 19 March 2025 and the market-leading easy access ISAs currently pay more than 5%.

As a result, savers could earn significantly more tax-free interest simply by transferring their money to a higher-paying ISA.

“It’s good to know that consumers are taking advantage of ISAs, but it’s vital they chase down the top rates, particularly if they have a flexible pot. Opening an ISA and making an initial investment is just the start, it’s important to regularly review whether it’s working hard enough and still suits someone’s needs,” explained Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

“Apathy is dangerous when it comes to savings cash, especially at a time when interest rates are falling, and inflation sits above its 2% target,” she warned.

How to transfer ISAs

The good news for savers is that you can switch easy access ISAs without penalty, so it should be relatively straightforward to move to a higher-paying account.

However, it’s crucial to follow the set ISA transfer process. Don’t just withdraw money from one ISA and redeposit it in another account, as this will affect your ISA allowance and your tax-free benefits.

To transfer an ISA, you simply need to fill out an ISA transfer form when you apply for an ISA with your chosen new provider. Cash ISA transfers should be complete within 15 working days.

“Many savers overestimate the effort involved in switching a cash ISA. I’d encourage anyone receiving under 2% to consider their options,” commented Derek Sprawling, Paragon Bank Managing Director of Savings.

When selecting an account to transfer to, make sure you consider other features besides the interest rate, including any limited bonus rates, withdrawal restrictions and minimum deposit requirements. Also check that the new provider accepts transfers in from other ISAs.

See our guide for more information on how to transfer ISAs.

Fixed rate vs easy access ISAs

While easy access accounts are useful if you want the option to withdraw from your savings, fixed rate ISAs may be worth considering if you won’t need your money for one year or more.

Easy access ISAs currently pay some of the highest rates on the market but, as the interest rate is variable, there’s a risk that the provider could lower the interest rate at short notice. This means you could get a lower return on your money than initially expected.

On the other hand, fixed rate ISAs pay a guaranteed rate of interest for the specified period.

As long as savers can afford to lock away access to their money, these fixed ISAs could be an appealing way to protect your money from any drops in rate, particularly as savings rates are on an overall downwards trend.

Indeed, at the start of March, variable savings rates were at their lowest levels since 2023, according to the latest Moneyfacts UK Savings Trends Treasury Report.