Key developments:
- Skipton Building Society says billions of pounds are locked in older instant‑access ISAs opened before 2020, with about £85.5 bn earning a modest 1.94% average rate. These accounts may now be under‑performing compared with newer ISA products that can offer double the interest.
- At the same time, a consumer advocacy group warns that 3 million US student‑loan borrowers could see a $12,000 tax bill after recent changes to the tax code, putting millions at risk of sizable penalties.
Why they matter:
- UK savers with legacy ISAs are missing out on higher yields, reducing the real growth of their retirement and emergency funds. Switching to newer ISAs could materially boost long‑term savings.
- In the US, the potential tax penalty adds a hidden cost to existing student‑loan debt, exacerbating financial strain for borrowers already coping with high loan balances and interest.
What to watch next:
- Lender promotions of newer ISA products and whether banks accelerate rate hikes to attract rollover customers.
- Legislative responses or guidance on the student‑loan tax change, and any relief measures that may be introduced for affected borrowers. [[1, 2]]