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Existing ISA savers may miss out on higher rates

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A number of banks and building societies are preparing for changes to the ISA allowances by introducing higher rates of return in an effort to attract new savers.

Not every saver with an ISA account, however, will be able to take advantage of the new rates.

As from 6 October, the ISA allowance is rising from £7,200 to £10,200 for those aged over 50. The cash allowance climbs from £3,600 to £5,100.

With savings providers keen to draw in new customers, several are now planning higher rate ISAs.

But those savers who have already taken out an ISA account in this tax year may discover that the improved deals are closed to them.

Andrew Haggar of Moneynet, the comparison website, said: “It’s a kick in the teeth for those who thought they were being prudent by locking into the best cash ISA rates earlier this year.”