As of this November Barclays are moving customers who have ISAs to an alternative Instant Cash ISA which gives a worse rate of interest. This is due to them removing 11 of their cash ISA products, which are now unavailable to new customers. The change will impact on 1.6 million customers leaving them with a worse rate. Only 740,000 will remain unaltered or on an improved rate.
It is claimed by Barclays that the changes are in an effort to simplify the product, both for customers and bank staff. The new Instant Cash ISA will have a stepped interest rate of between 1.29 and 1.49% AER.
The Bank advise that they will be informing all affected customers regarding the changes in writing. They also say that bank staff have been fully briefed in order to deal with any queries and support their customers.
Out of 11 old ISA products 8 will pay better rates. The Freestyle Cash ISA has an AER of 2.8% and the poorest return is the ISA Saver Issue 1 which give 1.51% AER.
Cutting rates in order to simplify product ranges is not a tactic unique to Barclays! On the contrary at the beginning of this year RBS and NatWest swapped 3 million of its ISA customers to new products. HSBC also did away with its teaser rates designed to attract new customers