As of today (July 1), the amount that savers can put into the new form of tax-free ISAs increases to £15,000 and, in a change to the rules, they are able to use them for any combination of cash or shares.
The old Individual Savings Accounts (ISAs) become known as New ISAs (NISAs) today and the changes apply to existing ISAs and those opened after July 1.
Until today, the total amount a saver could pay into a cash ISA in any tax year was £5,940. If they had a stocks and shares ISA, they could also have a cash ISA but the combined amount they paid into their cash and stocks and shares ISA was not allowed to exceed £11,880.
However, from today, savers will be able to move freely between shares and cash at any time within their ISA, using the full £15,000 to invest in the stock market, cash or a mix of both and can hold cash and stocks and shares with the same ISA provider or with different providers.
In addition, the maximum amount they can put into a Junior ISA for children also increased, from £3,840 year to £4,000. Meanwhile, anyone aged between 16 and 18 can hold a cash NISA but not a stocks and shares NISA.
Given the change, which has been widely publicised, it has been predicted that savers who have been holding back could deposit more than £1bn into ISAs over the next 72 hours and another £4bn is expected to be deposited by the end of the month.
However, City sources predict that banks may reduce rates rapidly to dissuade custom, as they can make little or no profit at the interest rates they must offer today to enter the best buy tables.