NFU Mutual claims cash Isa popularity may be waning

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NFU Mutual claims cash Isa popularity may be waning

Mon 9th Aug 2010

The popularity of cash Isas with long-term savers could be set to drop if the base interest rate continues at 0.5 per cent for much longer, according to NFU Mutual.

Investment specialist at the firm Chris Linpow noted that many cash Isas are currently paying interest rates below the level of inflation.

He stressed that such products have been an effective method of putting money aside for the past decade, but the decision of the Monetary Policy Committee (MPC) to keep the base rate at 0.5 per cent may cause people to reconsider their options.

Mr Linpow remarked: "Cash Isas don't offer the potential returns available on the stock market over the medium to long term, say five years or more."

The NFU Mutual representative suggested that a stocks and shares Isa may be a more profitable way of building up a nest egg for the future.

Last week, Santander chief economist Barry Naisbitt claimed that speculation is rising over when the MPC will raise the base rate.

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