What is a cash ISA?
- A cash ISA is a savings ISA (as opposed to an investment ISA).
- Similar to a savings account but allows interest to grow tax-free.
- Generally considered a safe place for your money.
How do cash ISAs work?
- You can contribute to the limit of £20,000 per year.
- Anyone over 16 can open their own cash ISA.
- Interest rates tend to be lower than most other ISA types, but they are the most secure.
Cash ISA rules
- Can pay all £20,000 into a cash ISA or split them between the various ISA types.
- Withdrawal depends on whether you have an easy access or fixed term ISA.
- Once you have withdrawn money, you cannot top up your ISA again if you’ve already paid the full amount.
- The only exception to this is if you hold a flexible ISA.
Cash ISA interest rates
- Cash ISA rates are often lower than other ISA types, as they are less volatile places for your money.
- Rates can be under 1% for instant access cash ISAs and up to around 2% for long-term fixed-term ISAs.
- The cash ISA market is very competitive, rates are not the only thing to consider.
- Some providers pay monthly and some annually.
Types of cash ISA
Fixed rate ISA:
- As the name suggests, these cash ISAs have fixed interest rates throughout the term of the ISA.
- To access the fixed interest rates most providers prevent you from withdrawing for a set period.
- This often means fixed rate ISAs have better interest rates.
Instant access ISA:
- Allow you to access money instantly/much quicker than fixed rate/term.
- Also known as easy access ISAs.
AAdvisory service Asset Asset Allocation Asset Manager
CCash ISA Central Bank Commodities Corporate Bonds
DDebt Discretionary Dividend
EEquity Exchange traded fund
FFCA Financial Adviser Financial Instrument Financial Planning Fixed Allocation FSCS
IIndependent Financial Advisor Inflation Investor profile ISA
MMiFID Mutual fund
PPension Portfolio Price/Earnings Ratio Purchase Managers Index
RRebalancing Retirement Planning Return Risk
TTotal expense ratio
VValue at risk Volatility