I’m a savings expert: Here’s how banks get cash deposits wrong

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I can reveal that big banks and building societies are giving savers incorrect information about ISAs.

I have found errors on the websites of Santander, Barclays and others.

Those who heed their messages risk not getting the best possible rates on their savings or not enjoying the flexibility that Isas now offer.

How are savers supposed to understand what they can do when even the big institutions get it wrong?

Let me explain the facts to avoid any confusion. ISAs are savings accounts that have the advantage of earning (tax-free) interest on up to £20,000 each tax year.

New rules came into force on April 6 that are designed to make Isas more attractive than ever.

They claim you can now open as many Cash ISAs as you like in the current tax year, with as many different providers as you like, within your £20,000 limit.

Until April, you could only open one cash ISA a year with a provider.

Gone are the days when you had to choose between an easy-access account or a fixed-rate account.

In theory, you can have as many as you want, either with the same provider or spread across several.

But some providers tell you this isn’t the case. Santander still says in the key facts it provides about its Easy Access ISAs and Fixed Rate ISAs that: “Under UK law, you can only make cash contributions to an ISA each tax year, whether with us or another ISA provider.”

Santander tells me it is still in the process of updating its terms and conditions.

Barclays is also wrong.

The factsheets for your Flexible Cash ISA (which is a fixed-term, fixed-rate ISA) and your Instant Cash ISA say: ‘Under the Individual Savings Accounts Regulations 1998 (‘ISA Regulations’), you are not eligible to apply if you have already signed up for a Cash ISA… either with us or another ISA trustee, in the same tax year in which you are applying for this ISA.’

The bank tells me it has updated its app and online banking site to reflect the new rules, but not yet its website.

When I checked late last week, Kent Reliance and Charter Savings Bank were still saying, in an oversight, that HMRC “prohibits opening multiple cash ISAs with multiple ISA providers in the same tax year”.

However, the errors have been corrected after I reported them. But the confusion does not end there.

While the rules state that you can distribute your money however you like, few providers offer this flexibility.

Most major banks and building societies, including Barclays, Coventry Building Society, Halifax, HSBC, Lloyds, Leeds BS, NatWest, Principality BS, Santander and Virgin Money, will only allow you to open a cash ISA with them.

So if you started one with any of these providers this tax year, you won’t be able to open another one unless you transfer the money from your existing ISA to the new one.

Among these larger providers, only Nationwide will allow you to open more than one ISA in the same tax year.

Some providers say they hope to allow you to do this in the future, but right now they don’t.

Providers that allow you to open more than one ISA with them include Paragon, Zopa, Charter Savings Bank, Aldermore, Newcastle BS and Kent Reliance.

Savers should remember that the way to get the most out of their money is to spread it out because no provider offers the best easy access and fixed rates.

For example, you could choose the top easy access account: 5.1 percent of Chip* — and a maximum fixed rate, such as 4.94 percent, fixed for one year from Shawbrook or 4.7 percent over two years for Nottingham BS and its online division Hive money.