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Cash ISAs for over 50s

Cash ISAs for over 50s

If you're in your 50s and looking for a safe place to keep your money, then you could consider a Cash ISA. It's a tax-free savings account that gives your money protection from any type of tax as long as you continue to hold it with in the ISA wrapper.

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What is a Cash ISA for the over 50s?

Anyone over 16 can have a Cash ISA. The good news is that Cash ISAs are open to everyone, no matter what their age. Unlike other financial products, such as mortgages, you can open an ISA at any time and hold it for as long as you want. Think of it as a long-term savings product that protects your money from tax.

Find out more about Cash ISAs with our in-depth guide:

How do Cash ISAs for the over 50s work?

You can save money into your Cash ISA each tax year. The tax year runs for 12 months between April 6 and April 5 the following year. In the 2020 to 2021 tax year you are allowed to put up to £20,000 of your money into a Cash ISA.

Everyone aged 16 or over can have a cash ISA (but for some ISAs, usually with stocks and shares options, you must be 18). Otherwise there's no age limit or preference to ISAs.

What are the different types of Cash ISA?

You can choose the right Cash ISA for you:

  • Easy access - no restrictions on withdrawing your money
  • Fixed-rate cash ISAs - the interest rate you get is fixed for a set term, usually between one and five years
  • Notice accounts - you will need to give notice if you want to access your money
  • Flexible Cash ISA - you're allowed to invest and withdraw money within a single tax year. Not all ISAs offer this option, so check before you sign up.

Alongside Cash ISAs, there are other types of ISA, which you can combine with your Cash ISA or have as standalone products. These are Investment ISAs (sometimes known as Stocks & Shares ISAs), Lifetime ISAs (these help you save for your first home or retirement and are only available to the under 40s) and Innovative Finance ISAs, which carry more risk.

Read more:

What is the best type of Cash ISA for the over 50s?

In your 50s you may still have a mortgage and a family living at home to care for, so you will have outgoings that could continue for some time. You will also probably be earning a salary, but thinking about how you can start to plan for retirement in ten to fifteen years’ time.

An ISA can be a good way to boost your short, medium, or long term savings. The money in your Cash ISA will grow tax free, and you won’t have to declare the interest you earn to the taxman.

However, if you're over 50 you may also want to consider a Stocks & Shares ISA, which invests in the stockmarket and could give your money the opportunity to grow at a faster rate than cash.

Stockmarket investments do, however, carry some risk and you may not get back what you invested.

A Cash ISA could be part of your savings plans alongside other financial products, such as a pension.

Find out more about Investment ISAs:

What are the advantages of a Cash ISA for the over 50s?

Cash ISAs are secure and your money is protected by the government’s Financial Services Compensation Scheme (FSCS) up to £85,000 per account. If you choose an ISA with a high rate of interest and lock into that rate for a year or two, then you will be protected if interest rates fall during that time.

All the money within your ISA grows tax free, and that allowance can never be taken away from you.

What are the drawbacks of a Cash ISA for the over 50s?

Although you can shop around for the best rates on Cash ISAs, generally speaking interest rates are low at the moment because of current economic conditions.

Also, everyone has a £1,000 Personal Savings Allowance if they're a basic rate taxpayer, or £500 if they're a higher rate taxpayer. This means most people don't pay tax on their savings.

However, this could change in the future if the Personal Savings Allowance is withdrawn or reduced.

Read more information about the tax advantages of Cash ISAs

How do I find the best Cash ISAs for over 50s?

It's worth shopping around for the best cash ISA for over 50s. By using our comparison table and looking at the whole of the options in the market, and not just your local bank or building society, you can find the best rate.

Before you invest in a Cash ISA make sure you have read all the terms and conditions. Are withdrawals restricted? Is the interest rate fixed? Can you make transfers into your over 50s Cash ISA?

How do I find the best transfer rates for Cash ISAs?

You're only allowed to invest £20,000 each tax year, but you can continue to hold all the Cash ISAs you have opened in previous years.

After a while you may find that your best buy Cash ISA is less competitive. If this is the case you may need to transfer your over 50s Cash ISA to a new provider. This is a simple process and you just need to ask your new provider to arrange the transfer.

Is there a limit when it comes to transferring old ISAs?

There's no limit to the amount you have transfer from old ISAs into a new Cash ISA, but you do need to be sure that you make the transfer and not just close down your old accounts.

If you close them down, the tax advantages will be lost. If in doubt, ask your new provider before you make any changes – they will be able to help you.

What are the best ISA rates for over 50s?

In recent years savings rates in general have been very low, because the Bank of England base rate has been historically low for many years.

This means that Cash ISA savings rates, in common with many other savings products, are low at the moment. The best rates for Cash ISAs are constantly changing, as new products and providers add or change their rates.

That's why it's important to shop around and use our comparison table for the most up to date rates and offers.

Are you earning enough interest?

It could be time to find a new savings account, find and compare ISAs with our partner

Compare ISAs

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