According to financial experts, one of the smartest ways to maximise the value of your savings is to avoid paying tax on them. Therefore, if you have money to save and want it to work as hard as possible for you, then it might pay to invest in a Cash ISA (Individual Savings Account).

With an Cash ISA you can save up to £3,600 per year, tax free. And despite the financial rewards, many allow you to readily access your money without incurring interest penalties. But, with the amount of different accounts available, how do you know which one to opt for?

As a general rule, the interest rate on the account should provide you with the best guide. Be aware that some providers may offer high introductory interest rates to secure your custom, which then significantly drop after a certain period of time. Pay attention to the terms and conditions, as you would when purchasing any financial product.

Aside from interest rates, is also important to determine which type of ISA is best for your situation. There are three different types available: analysing your financial circumstances and spending habits will help you to recognise which one is best.

The easy access Cash ISA is a great account for those who need instant access to their savings and tend to dip into them on a regular basis. Although you may not receive as high a rate of interest, it does mean you still have full access to your money without having to give any notice. Just bear in mind that you are likely to lose your tax free status on any finances that are withdrawn.

A notice account is similar to an easy access account in that money can be paid in at any time. However, before you can withdraw anything, you have to give your financial institution a set amount of notice. This will be agreed upon before you open the account. This is a useful option for those who don’t expect to need instant access to their cash, but who don’t want to be tied into a long-term deal.

Finally, there is the fixed rate Cash ISA. This type of account typically yields the highest rate of interest because you are paying in a lump sum, which you are then not allowed to touch for the term of the agreement. They are best for people who can afford to set aside a certain amount of money without having to rely on it for the year.

Of course, there is much to understand when you are considering a Cash ISA as a savings option. Not only will you enjoy tax-free interest but you will also be secure in the knowledge that your money is working hard for you.

Jamie Rigwell writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.


Article from articlesbase.com

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