Are cash ISAs still worth holding?

Whilst cash ISA rates with banks are very poor (I'm also only getting 0.5%), they do of course have the added protection of the FSCS (assuming you have under £75K in any one institution), whereas P2P lending doesn't and is therefore more risky.

So you have to weigh up the value of FSCS protection vs. the unprotected, but likely higher expected returns from P2P.

However, if interest rates for cash ISAs continue to fall though, I can see more and more people pulling their money out of cash ISAs and sticking it in P2P, and I think we'll certainly see a lot more of that once more providers begin offering IF ISAs (currently, I think there's only 3 providers offering IF ISAs)

Another option would be to transfer your cash ISAs to a flexible cash ISA (if they're not already) and withdraw the money to invest in P2P. You then have the option to replace it in the flexible ISA before the end of the tax year if things change.

If you do, check the dealing price against NAV (roughly 101p currently) and aim to buy when the price is lower. I've used a series of limit orders to accumulate at approx 4% average below NAV.

Do remember to continue making pension contributions. Assuming someone is 55 or older and earning within their personal allowance there's £720 a year of tax relief money to be made from paying in the maximum for those with no qualifying income of 3600 gross, 2880 net. Still profitable if in basic rate income tax, just less so.

If you aren't yet 55 but are quite close it might be best to use your savings to maximise pension contributions now with a view to withdrawing later. There's still time to transfer to a flexible ISA, withdraw and invest into P2P for a while then sell the P2P and pay into a pension this tax year.

The increased ISA annual allowance has reduced the penalty of taking money out of the ISA since it's often not going to take too long to get back to the original level. Easy for that to end up favouring pension over ISA use when close to 55, depending on just how big the amounts are.

For another slant on the original Q .. there are lots of non-ISA accounts which pay rather better than any ISA account you can find, so depending on your tax position you might well be better off putting 'instant access cash' in a non-ISA account, and use the ISA (if you still have money to invest) for S&S or P2P.

As for 'still worth holding' .. well yes, I have some ancient fixed rate cash ISAs which are definitely still worth holding. 8>. Worth opening a new one at <1%?? .. nope, definitely not.

I moved most of my cash ISAs over to S&S ISAs a few years back.