Cash ISA - buyer's guide
How to find the best Cash ISA or Savings Account
Whether it's for a rainy day or for a one-off big purchase, it's crucial to make your savings work hard for you. So while savings providers may well be offering rock-bottom interest rates, you’ll still need to find the best savings account or best Cash Isa for your money.
- If you're a UK taxpayer then a Cash ISA should be the first port of call for your savings. Everyone aged over 16 can save up to £11,520 in an Isa during the 2013/14 tax year - of which £5,760 can be saved in cash. This means all interest you earn in your ISA is free of tax - so a cash ISA should always be the first home for your savings.
- When picking the best Cash Isa, the first thing to decide is whether you want to fix your interest rate or opt for more flexibility with a variable rate. If you want to secure the interest rate you earn on your savings, and are happy to lock your money away for a set period of time, then a fixed-rate ISA might be for you. However, if you want to make additional deposits beyond the upfront opening deposit, or make withdrawals, then a best Cash Isas with easy access.
- Outside of the Isa market, if you’re looking for the best savings account that allows you to access your money quickly, then a no-notice deal is a good idea. Just remember, the interest rate on these accounts is variable so it could decrease down the line. Also, watch out for sneaky terms and conditions - not all instant access accounts offer unlimited withdrawals, so shop carefully.
- If you want to make withdrawals but are happy to give your bank or building society before you do, then you could get a better rate with a notice account.
- Fixed-rate savings accounts are normally aimed at people with a lump sum that they wish to lock away for a pre-agreed period of time. Interest is fixed so your return is guaranteed. However, bear in mind that withdrawals and further deposits are rarely allowed.
- The current economic backdrop has not only highlighted the importance of saving, but means more people would like to do it little and often, so regular savings accounts are popular. If you do wish to squirrel away a regular amount each month, compare regular savings accounts.
If you’re looking for an account for a child, don’t always be swayed by free gifts providers might offer to lure you in – they do not always offer the best rates. Also, beware introductory offers – many providers offer a great rate for the first year which reverts to a paltry level of interest in year two and beyond.