Cash ISAs are a great way to save - they work just like a normal savings account, but they have the added bonus that the interest you earn is all tax-free.
Keep reading for our tips on how to choose the right cash ISA for you and making the most out of your cash ISA savings. Use the table below to compare ISAs:
It's a good idea to use up as much of your cash ISA allowance as you can early on in the tax year. If you put your full £20,000 cash ISA allowance (2019/20 tax year) of into an account paying 2.5% AER at the start of the financial year, over 12 months you would earn £500 in interest.
A simple, tax-efficient way to invest the full ISA allowance each year is through a stocks and shares ISA. Use the below table to compare stocks and shares ISAs.
If you are planning to save monthly rather than pay a lump sum into your cash ISA at the beginning of the tax year, it's a good idea to set up a standing order every month from your current account to your cash ISA.
You should also look for a cash ISA with a low starting balance of £1 or £10 and the best interest rate you can find to make sure you make the most of your savings.
Cash ISAs that you run over the internet tend to come with the best interest rates, because they are cheaper for the bank or building society to run, so they can pass this saving on to their customers in the form of higher interest rates.
They also offer the convenience of being able to run your cash ISA account from home.
Check to see if your cash ISA has an introductory rate. This headline rate might be a good deal and look appealing, but it's important to check that the standard rate you receive is competitive too, unless you're happy to transfer your cash ISA when the introductory period expires.
If you don't need to have access to your money straight away, you could consider a fixed rate cash ISA. Fixed rate accounts can often offer better interest rates than instant access cash ISAs, in return for committing your money for a set period.
If you already have a cash ISA, make sure that it's paying a competitive rate. The interest rates on many cash ISA accounts have been cut dramatically in recent months, so you could be earning much less interest than you think.
Switching can make a big difference. Find out how to transfer your cash ISA.