Adult cash ISA balances jumped by £38 billion during ISA season, according to Paragon Bank.
Analysis of CACI data for the period between the end of January and the end of May showed that fixed and instant access adult cash balances grew by £38 billion to £478 billion across 25.6 million accounts.
It comes ahead of the planned reduction in the cash ISA allowance from £20,000 to £12,000 for under-65s from April 2027.
Paragon Bank said that over the period, the average adult cash ISA balance increased from £17,264 to £17,848, while the average balance held in non-ISA accounts fell marginally from £11,513 to £11,416.
Much of the growth was driven by demand for fixed-term products, with fixed-term ISA balances accounting for £28.8 billion of the overall increase, rising to £269.9 billion.
Instant access ISA balances also grew, albeit at a steadier pace, increasing by £9.6 billion to £203.5 billion.
Andrew Wright, head of savings at Paragon Bank, said: “The £38 billion increase in adult cash ISA balances shows that savers continue to recognise the value of protecting their interest from tax. It appears many used the busy ISA season to make more effective use of the tax-free wrapper.
“The particularly strong growth in fixed-term ISAs also suggests that customers were keen to secure competitive rates amid expectations that interest rates could fall.”
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