The ISA structure is a tax-free way to save with a £20,000-a-year allowance. But does this mean locking your money away for long periods of time – or are there accounts where you can access your cash?
A Cash ISA is a savings account which allows you to earn tax-free interest on your savings.
There are many kinds of Cash ISA accounts which offer different benefits depending on who you are and how you want your money to work.
You can only pay into one case ISA each year, so picking the right Cash ISA for you is key.
One important factor is whether you can take your money out.
If access to your cash is key, then you might want to avoid a Lifetime ISA, but an Easy Access ISA might be for you.
We’ve broken when you can expect to access your money from each type of ISA account.
- Easy access ISAs As the name gives away, this is the easiest ISA to access your cash from. You won’t incur a penalty for taking your money out of your ISA – although some providers might restrict the number of withdrawals you can take out per year.
- Regular saver ISAs Most regular saver accounts offer fixed interest rates (assuming you make a monthly deposit). These mostly last for 12 months during which time you won’t be able to access your cash.
- Junior Cash ISAs
If your parents have opened and managed a JISA for you, then you will be able to manage the money from the age of 16 but you won’t be able to withdraw any until you are 18. - Notice ISAs
Notice Cash ISAs do what they say on the tin – while they do lock your money away, it is for a shorter period of time than fixed term ISAs, and require you to tell your provider beforehand when you will need to access your funds. - Fixed term ISAs
Fixed term ISAs are very self-explanatory. It keeps your money in a tax-free wrapper, but you aren’t able to access the money for a fixed period of time specified by the term of the fixed rate ISA. Terms can vary usually from one to five years. You’ll be offered a higher interest rate, but you won’t be able to access your funds. - Lifetime ISAs
Lifetime ISAs offer a generous interest rate – you can put in up to £4000 per year the Government will add 25% of this to your account to a total of £1000 per year. In terms of accessing your money, with a Lifetime ISA you can only do this when you buy your first home or when you turn 60. If you withdraw earlier than this, there will be a 25% penalty.
Choose the Cash ISA option which suits you best from our list of Cash ISAs.