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Mar 2020

Is a Monthly Saver ISA Right for Me?

Is a Monthly Saver ISA Right for Me?

Looking for an ISA which suits your monthly saving habits? Then a monthly saver ISA might be the right one for you. We've broken down all you need to know if you're thinking of opening a monthly saver ISA. 

What's a Monthly Saver ISA? 

A monthly saver ISA (also known as a regular savings ISA) is a great choice for people who put money aside on a regular basis and want tax-free returns on their savings.

These offer a fixed rate of interest which will be paid over an agreed term.

This allows you to drip-feed your money into an account and maximise your savings in a tax-free ISA wrapper. The rates of a monthly saver ISA are generally better than that of a standard ISA, making it an attractive option for those looking to save on a regular basis.

Currently the ISA allowance for 2019/2020 is £20,000 (and this is going to stay the same for 2020/2021). Most people don’t have this in a lump sum to funnel into an ISA; many people will instead save a set chunk of their paycheque each month. By saving into a monthly saver account, you can put aside set regular amounts into a tax-free wrapper. 

How much can I pay in?

This will depend on your provider.

There will most likely be both minimum and maximum amounts which you can pay into an account each month.

Make sure you know this before opening an account and putting money in – as you don’t want to be hit with unwanted penalties or risk your money not gaining the interest rate, you want to make sure you’re not over-depositing each month.

If you have a lump sum of money you want to invest but you really want to open a monthly saver ISA, you can set up a direct debit to the ISA, which will automatically transfer your money each month with minimal hassle.

Remember that the higher interest rate will only apply if you play by the rules of the account, so if you over-deposit (or under-deposit) you might run the risk of not being eligible. 

What if I miss a monthly payment? 

Depending on the provider, if you miss a monthly payment you could loose the higher interest rate. So, it's a good idea to know this beforehand so you're not caught out by a nasty surprise. 

How's the interest paid? 

When it comes to interest, some providers will give you a choice about how and when the interest is paid. It might depend on the account too, if it is specified by the type of account. 

These options might include: 

  1. Interest paid monthly 
  2. Interest paid annually 
  3. Compound interest 
  4. Interest paid to another account

Can I withdraw my money?

Again, this will depend on the account and the provider. There will likely be restrictions on withdrawals, but these will vary. 

These might include: 

  1. How much you can take out 
  2. How often you can withdraw money 
  3. When you are able to take out money 

If you're not sure this is the right ISA for you, then don't worry - there are a wealth of good ISAs available to suit all needs. Read through our ISA pages to get an overview of what's on offer to find what suits you: 

  1. Read more about Cash ISAs
  2. Read more about Investment ISAs
  3. Read more about Lifetime ISAs
  4. Read more about Peer-to-Peer ISAs
  5. Read more about Junior ISAs
Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

Lifetime ISAs

Save for your first home and retirement

Compare Lifetime ISAs

Junior ISAs

Invest for your child’s future

Compare Junior ISAs: 

Stocks & Shares ISAs

Invest tax-free in stocks and shares 

Compare Stocks and Shares ISAs:

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