M&S Bank closing top Cash ISA to new customers


Updated on 11 January 2013 | 1 Comment

The market-leading Advantage Cash ISA will be withdrawn from the 21st January.

M&S Bank has announced that it will no longer be accepting new applications for its market-leading Advantage Cash ISA from Monday 21st January. It’s also dropping the interest rate on offer from March.

The Advantage Cash ISA currently pays an interest rate of 2.75% AER. It’s the top instant access Cash ISA, both in terms of ISAs for this tax year and those that offer the transfer in of previous years’ ISA savings.

It’s another blow for savers at a time when top Cash ISAs are regularly being closed to new customers. Teachers Building Society confirmed to us that it is withdrawing its Cash ISA Reward to new customers, which was also in the upper echelons of the best buy tables as it is paying 2.65%.

If you want to apply for the M&S Advantage ISA you need to make sure your application reaches the bank by Monday 21st January. But you should note the variable interest rate on the ISA is to be cut to 2.25% from 6th March. It was cut from 3% to 2.75% as recently as December.

M&S told us: "All of our savings products are limited offers and as such our Advantage Cash ISA will close to new business."

What's causing these Cash ISA cutbacks?

As well as limited offers, the Government’s Funding For Lending scheme has been blamed for the reduction in interest rates and closure of accounts to new customers across many savings products. The scheme, designed to kickstart the housing market, offers banks and building societies the chance to borrow cheaply from the Bank of England with the aim that they will then lend more to mortgage borrowers.

However, this cheap borrowing means financial institutions don’t need to attract as many savings deposits, which traditionally funded much of their mortgage lending. As we reported in December, 350 top savings accounts disappeared over the course of 2012.

Since September, the top interest rate for an easy access Cash ISA for this tax year has fallen from 3.06% to 2.75%.

Earlier this week, online savings platform Governor Money, which allowed customers to save in several Cash ISAs from one account, announced it is closing to new business. It blamed the “scarcity of products” following the launch of the Funding For Lending scheme.

If you're looking for a Cash ISA, The UK's best Cash ISAs rounds up the top rates for this tax year while Top Cash ISAs for transfers lists the best rates if you have old ISAs you'd like to transfer.

More on savings

Compare Cash ISAs

The best instant-access savings accounts

The top fixed-rate savings bonds

Savings accounts paying bonuses are disappearing

Is your money safe with a bank you've never heard of?

Comments


Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © lovemoney.com All rights reserved.

 

loveMONEY.com Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FCA) with Firm Reference Number (FRN): 479153.

loveMONEY.com is a company registered in England & Wales (Company Number: 7406028) with its registered address at First Floor Ridgeland House, 15 Carfax, Horsham, West Sussex, RH12 1DY, United Kingdom. loveMONEY.com Limited operates under the trading name of loveMONEY.com Financial Services Limited. We operate as a credit broker for consumer credit and do not lend directly. Our company maintains relationships with various affiliates and lenders, which we may promote within our editorial content in emails and on featured partner pages through affiliate links. Please note, that we may receive commission payments from some of the product and service providers featured on our website. In line with Consumer Duty regulations, we assess our partners to ensure they offer fair value, are transparent, and cater to the needs of all customers, including vulnerable groups. We continuously review our practices to ensure compliance with these standards. While we make every effort to ensure the accuracy and currency of our editorial content, users should independently verify information with their chosen product or service provider. This can be done by reviewing the product landing page information and the terms and conditions associated with the product. If you are uncertain whether a product is suitable, we strongly recommend seeking advice from a regulated independent financial advisor before applying for the products.