You may have seen in the news recently that the Bank of England made the decision to cut their base rate again, this time to 0.25%. This has caused many of those in the savings market to do the same, and you will now be seeing a large amount of rate cuts across the industry with many high street banks and building societies slashing their ISA rates.
Many savers have already been stripped of a percentage of their interest rate, with 354 cuts to savings products in August alone. The average cash ISA rate has fallen from 1.13% at the beginning of August to 0.99%, and the average easy access account on offer is now paying less than 0.5% in interest.
Some saving deals have been completely withdrawn from the market during August, with 20 ‘best buy’ deals gone. There were some providers who made bigger drops than the actual cut from the Bank of England, with the largest reductions in interest up to five times more. [1]
The cuts by banks mean that, across the majority of savings products on the market, average interest rates are just half what they were five years ago. According to Moneyfacts, the average rate on an easy-access cash ISA has fallen from 1.51% five years ago to 1.04% today. [2]
Increase in subscriptions to stocks & shares ISAs
However, HM Revenue and Customs official figures show that ISA subscriptions soared to record levels during the 2015/16 tax year. Their figures show that total subscriptions rose to £80.2bn, an increase of £1.4bn from the previous tax year.
This was driven by an increase in subscriptions to stocks and shares ISAs, which totalled £21.4bn an increase of £3.5bn from 2014/15*. It is evident that savers and investors still understand the longer term benefits of sheltering their hard earned money from tax. [3]
Shepherds Friendly Stocks and Shares ISAs
We are happy to say that we’ve paid a bonus on our Stocks and Shares ISA since it launched in 2008.
Our ISA is invested in Stocks and Shares as well as other commodities, but is medium to low risk, meaning that it’s not affected by short-term fluctuations within the stock market and aims for steady growth. However, as with all investments your capital is at risk.
To give you an idea of the type of returns you can receive from our Stocks and Shares ISA, if you had opened a plan in 2008 and put £100 per month in for 8 years, you would have ended up with a final value of £10,843.42, with your contributions amounting to £9,600. That means that the total bonus on your savings would have been £1,243.42.
| Year | Year Deposits | Year Interest | Total Deposits | Total Interest | Balance |
| 1 | £1,200.00 | £19.41 | £1,200.00 | £19.41 | £1,219.41 |
| 2 | £1,200.00 | £55.99 | £2,400.00 | £75.41 | £2,475.41 |
| 3 | £1,200.00 | £93.67 | £3,600.00 | £169.08 | £3,769.08 |
| 4 | £1,200.00 | £132.48 | £4,800.00 | £301.56 | £5,101.56 |
| 5 | £1,200.00 | £172.46 | £6,000.00 | £474.02 | £6,474.02 |
| 6 | £1,200.00 | £213.63 | £7,200.00 | £687.66 | £7,887.66 |
| 7 | £1,200.00 | £256.04 | £8,400.00 | £943.70 | £9,343.70 |
| 8 | £1,200.00 | £299.72 | £9,600.00 | £1,243.42 | £10,843.42 |
It is important to bear in mind that returns are not guaranteed in stocks and shares investments and the value can go down as well as up. However, we apply an investment strategy known as ‘smoothing’ that attempts to even out fluctuations in the ISA value and aims to keep a consistent level of bonus payments, which has allowed us to pay a bonus since our plan launched, including throughout the financial crisis which started in 2008.
Our fund at Shepherds Friendly Society is actively managed meaning that our fund manager may move your money into safer commodities when market or external factors threaten investment conditions. You can find out more about our Stocks and Shares ISA here.
Updated quarterly bonus as of January 2024
From 2008-2023 we paid our Stocks & Shares ISA members a bonus annually, but as of January 2024 this changed to quarterly instalments paid four times a year, once every three months. For more information on this, please see our quarterly bonus FAQs.
Please note: Whilst the information in this article was correct at the time of publication, as of January 2024 we have updated the bonus payment schedule to every three months instead of once a year. Past bonuses are not a guarantee of future bonuses.
[1] https://moneyfacts.co.uk/news/savings/savings-market-left-devastated/
[2] http://moneyfacts.co.uk/news/isas/isa-season-emptiness-as-rate-cuts-dominate-by-90/
[3] https://moneyfacts.co.uk/news/isas/record-deposits-to-isas-but-cash-falls-from-grace/
