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ISA rate cuts could raise debt risk

09/06/2009

Several banks and building societies have withdrawn their most generous ISA (Individual Savings Account) rates from the market, The Telegraph reports.

With the base rate held at 0.5% for the third consecutive month, many savings accounts currently offer very little in the way of interest.

ISAs, however, have still offered relatively high interest rates in recent months, but it seems many of the best rates are now being withdrawn.

In particular, this could affect people who rely on savings interest to supplement their income, who may find that their returns are significantly lower than in recent years.

A spokesperson for Debt Advisers Direct said: "Savings can be important regardless of the interest rate, but in the current climate it may be a good idea to consider whether any `spare` money could be better used - for overpaying debts, for example.

"However, so long as the saver is sure they can comfortably meet all their commitments, saving is still a good idea. Savings offer protection against debt, and it`s worth putting money aside even when interest rates are low."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

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