Cash ISAs. Three good reasons you might invest in one…and four good reasons that might change your mind.
ISAs have been around for over 15 years now, and have become very popular – in fact, it’s estimated that around 14 million people invest in them every year. Most popular of all are Cash ISAs, available from High Street banks and building societies; but are they still the best option for savers? Here we take a look at what’s good about them…and what’s not so good.
Why might you choose a Cash ISA?
- You can invest up to £20,000 and won’t pay any tax on the interest. The biggest reason for having any ISA is that they offer a tax-free ‘wrapper’ – in other words, you’ll keep all the money your savings earn in interest. It’s why they were introduced in the first place, to encourage people to save more.
- You can often get instant access to your money if you need it. Many Cash ISAs are instant access accounts paying a variable interest rate, which means if you need your savings you can withdraw them straight away.
- Your savings are protected. Up to £50,000 of cash put into UK banks or building societies is protected by the Financial Services Compensation Scheme (FSCS) in the event of that bank or building society collapsing.
Why you might not want a Cash ISA…
- Your savings are losing value. Right now even the best Cash ISAs pay pitiful interest rates below the rate of inflation – so you’re losing out.
- Be wary of ‘headline’ interest rates. These offer reasonable interest for 12 months before dropping to next to nothing. Which means you have to move your money every 12 months to keep earning decent interest.
- It can mean tying your money up for years. Take a close look at Cash ISAs offering the best rates. Often you’ll find it depends on you tying your money up for several years.
- There are better ISA returns available. There are many different types of ISA out there, all offering tax-free saving and the same investment limits. We refer to these as ‘Intelligent ISAs’ – and at In the Know, we’ll introduce you to regulated ISA experts who’ll tell you what options are available. They’ll focus on maximising your returns whilst protecting your capital, too.
So quite simply, if you want to get a better return on your savings it may be worth looking beyond the usual High Street options.
If that appeals to you, In the Know can help you review what’s available through regulated ISA experts, without any commitment or cost. Just use this link, and see if your savings can work harder for you.