Cash ISA

A Cash ISA is a savings scheme that allows you to save a certain amount of money each year completely tax-free. ISAs (which stands for Individual Savings Accounts) were introduced in 1999 to replace previous government savings schemes, PEPs and TESSAs. There are two components to an ISA, enabling you to both save your cash and invest in stocks and shares. At the moment anyone under 50 years old can put up to £3,600 into a Cash ISA over the course of the year, but the allowance is £5,100 if you are over 50. From April 6th 2010, everyone will have the annual allowance of £5,100 for a Cash ISA, or £10,200 of total potential tax-free savings each year.

A Cash ISA is held at a bank or a building society. You can only use one Cash ISA provider in any one tax year, although you can change your provider from year to year, which enables you to shop around to find the best deal. You should always consider using up your ISA allowance before using any other savings accounts, because the fact that you are not charged any fees means that the interest rate you receive is usually much more competitive. If you were to withdraw money from a Cash ISA in a tax year, you would still have the same allowance, (for example, if you put in £2,000 and withdrew £1,000, you would still only be able to put in a further £1,200 – or £3,100 for the over 50s). Therefore, if you are going to put your money into a Cash ISA, you should budget to lock it away for the year or you lose some of the tax-free benefit.

Find a great rate on a Cash ISA today!

A Few ISA Basics

• ISAs (Individual Savings Accounts) are investments on which you do not have to pay taxes or capital gains taxes.
• ISAs tend to have very good interest rates, so people usually see a good return from investing in an ISA.
• There are stocks and shares ISAs and cash ISAs.