Raised ISA limit encourages record savings

The increase in the amount of money that Britons can put in an individual savings account per year has sparked record deposits, according to the Investment Management Association.

Last October, the ISA allowance for the over-50s increased from £7,200 to £10,200. Britons under 50 saw their ISA threshold increase to £10,200 in April. The IMA said that since the change, on average, £400m in new money was being invested in ISAs each month.

Richard Saunders, IMA's chief executive, said: "Our research shows that people are positive about incentives to save – with around half of existing investors saying they would invest more if the annual ISA allowance were raised. ISA sales are at the highest level for many years. There is a good chance that 2010 could be the best year ever for ISAs."

The news of increased savings dovetails with Bank of England figures last week showing that, in August, UK consumers paid back £120m more on loans and credit cards than they spent.

Malcolm Hurlston, the chief executive of the Consumer Credit Counselling Service, the debt charity, hailed this as a sign of "a new prudence in managing credit, with the recession and credit crunch transforming people's attitudes."