ISA returns could pay for your summer holiday – especially this type of account

The average annual ISA returns over the past 12 months were enough to pay for a seven-day package holiday, a new analysis shows.

But those who opted for one certain type of ISA, according to real estate investment platform easyMoney, are “well on their way” to affording something a little more luxurious.

The investment platform analysed the average annual returns for various categories of ISAs over the past year to see what kind of holiday savers could afford with their interest payouts after investing the full annual ISA allowance of £20,000. This was then compared to the average price of a holiday.

The average seven-night package holiday costs £851, which following easyMoney’s analysis, seems to be an amount easily covered by the past year’s ISA returns.

The average two-year fixed-rate Cash ISA, if opened in June 2023, generated annual returns of 4.42 percent.

A £20,000 investment would mark a cash return of £884 – more than enough to cover a one-week package holiday abroad.

The one-year fixed-rate ISA option, with an average return of 4.36 percent, also generated enough to cover a package trip with annual returns of £872.

On the other hand, easyMoney said Stocks and Shares ISAs have struggled to match the returns of Cash ISAs over the past year.

With an average interest rate of 2.8 percent, a £20,000 investment would generate returns of £560. However, this would be more than enough to cover a two-night city break in a three-star hotel, which averages £301.

Those looking for something more special than a seven-night package holiday could look towards an Innovative Finance ISA (IFISA).

According to easyMoney, the average rate of return on an IFISA was 5.4 percent in 2023. A £20,000 investment at this rate would yield an annual cash payout of £1,079.

The average price for a two-week long-haul holiday is £2,265. Therefore, saving IFISA returns for just two years could be enough to cover the trip.

Jason Ferrando, CEO of easyMoney says: “Everyone has a different motivation for saving money in an ISA. For some, it’s about saving for retirement, others want to buy a house. But for a lot of people, it’s about making their money work for them in order to create additional income that can be spent on getting the most out of life.

“Getting away on holiday every year is something that many of us look forward to, but with the cost of living running so high, and income struggling to keep up with the increasing expense of day-to-day life, many feel they can no longer afford to spend hard-earned salaries on what now feels like a luxury.

“But putting your savings into an ISA account, be it a traditional Cash ISA or the increasingly popular IFISA, enables you to create additional wealth for yourself that you simply wouldn’t have by keeping your money in a current account.”

People can check the best Cash ISAs and savings accounts of the week here.


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