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3rd
Feb 2020
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What is a Cash ISA?

What is a Cash ISA?

An ISA does exactly what it says on the wrapper – in fact, it is the wrapper. ISA stands for “individual savings account”, designed to help you maximise your savings by keeping your money in a “tax-free wrapper”

A Cash ISA is perhaps simplest to understand because it’s basically a cash savings account – similar to a bank savings account you might have alongside your current account.

There are lots of different kinds of ISAs for various purposes, such as Lifetime ISAs designed to maximise long-term savings or Junior ISAs for children.

The advantage to saving your cash in an ISA account is that the interest you earn won’t be taxed.

This means that the interest you gain on your savings will not be taxed. These are limited, as there is a ceiling on what a saver can put in an ISA each year.

How much can I save in a Cash ISA each year?

Every UK taxpayer has an annual “ISA allowance”: a cap on how much money they can put into one or more ISA accounts each year.

The maximum allowance for this current tax year 2019-2020 is £20,000 per person.

You can choose whether you put all of that £20,000 into a Cash ISA account or spread it across different types of ISA accounts.

Some key facts:

  • You can only open one Cash ISA each year
  • There are lots of different Cash ISAs on offer from banks, eg. instant access, fixed-rate deals and regular savers
  • Your ISAs will either be Flexible or Non-flexible You can choose either a Flexible or Non-Flexible Cash ISA
  • Flexible accounts allow you to take your money out of the ISA account and put it back in within the same tax year. This won’t impact your allowance. Some banks won’t offer a flexible ISA.
  • Non-Flexible accounts mean that you cannot take any of the funds in your ISA out of the account and return it in the same tax year.

Can I access my money in a Cash ISA?

It depends on what kind of account you choose.

The more notice you have to give the higher the interest you get. So on a one-year fixed rate ISA you will get a higher interest rate than an instant access. Different options include:

  • instant access Cash ISAs, where you can access your money whenever you want to.
  • fixed-term options which will lock your money away without access to your cash for a set amount of time (eg. one year, two years, five years).
  • Flexible ISAs will allow you to withdraw your money at any time, and return the money within the same tax year. Flexible ISAs will generally have lower interest rates, so the returns will be lower – but the benefit of that might be outweighed by the ability to withdraw your funds.

Are Cash ISAs worth it?

It’s always a good idea to shop around for the best interest rate before opening an ISA – but don’t become complacent once you have opened an account. You can transfer your ISA to another provider if you find a better interest rate with a different bank, assuming the new bank accepts transfers.

There can be a large difference between the worst and the best performing ISAs which means you need to shop around to get the best possible interest rate.

Is a Cash ISA safe?

You can get a Cash ISA through a bank, which are Financial Conduct Authority (FCA) approved and the Financial Services Compensation Scheme (FSCS) protects your savings up to £85,000.

How do I open a Cash ISA?

In order to open a Cash ISA:

  • You will need to be over the age of 16
  • You need to be a UK resident.
  • You need to have a national insurance number.
  • You have not opened another Cash ISA this tax year.
  • You have not already reached the limit in savings in ISAs this tax year.

Click here for a selection of Cash ISAs so you can find the best rate for you.

Fixed Rate Cash ISAs

1 Year Fixed Rate Cash ISA

from Cynergy Bank

Interest Rate (AER) 1.30%
  • Term: 1 Year


  • Minimum deposit £500
  • Available to individual applicants aged 16 or over
  • Access to funds before the end of the term is subject to a fee equivalent to six months’ interest

Calculate your interest with this plan

Your savings:
£
You could gain:
£0.00 (per tax year)
Deposit Cash ISAs

The Enhanced Participation Deposit Plan

from IDAD

ISA Option
Maximum Potential Return 4.00% pa or 6 x FTSE growth
  • Deposit Taker: Goldman Sachs International Bank
  • Term: Up to 7 years

Important Information: This is a structured deposit plan and is capital protected. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS), depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term.

  • Plan can be ended early by Deposit Taker
  • 1% per quarter (4% pa) if plan ends early
  • 6 x FTSE 100 Index growth if plan runs full term
  • Capital protected product*
  • Eligible for the Financial Services Compensation Scheme (FSCS)
  • If plan runs full term returns not guaranteed. You may only receive a return of your original capital
  • Minimum investment £10,000
  • If you withdraw your money during the plan you may get back less than you originally invested

Calculate your interest with this plan

Your savings:
£
You could gain:
£0.00 (per tax year)

Important Information: * The return of your initial deposit depends on the ability of the deposit taker (Goldman Sachs) to repay your money. Structured deposits offer you the potential to earn higher returns than you would with a regular savings account. Your returns are based on the performance of an index or commodity. If the investment does not perform well you may receive no income or capital growth, but you can be confident that your capital will be repaid. You have no access to your deposit during the term of the account, typically 3 to 6 years but your original capital will be repaid in full at the end of the term. In the event that the deposit taker is unable to repay your initial investment and any returns stated you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) depending on your individual circumstances.

Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

Is a Stocks and Shares ISA Safe?

19th February 2020

Are you interested in opening a Stocks and Shares ISA, but worried how safe your money would be? Investments can never be a 100% safe bet, but with Stocks and Shares ISAs you are given some protections for your cash. 

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