| Individual Savings
Account (ISA) Its worth noting
that you pay tax on any money you save. This is taken out
of the interest before its paid to you. However since April
1999 you have been able to invest money into individual savings
accounts (ISA). They allow you to save a certain amount of
money each year without paying tax on it.
The compare individual savings account (ISA)
tool compares over 250 cash ISAs and takes into account the
type of account you are looking for and the amount of money
you are looking to invest, whether a lump sum or monthly amount.
It then lists the accounts available sorted by interest rate
and offers the chance to apply for an account online.
How ISA work?
- You can invest up-to £3000 per tax year
from a savings account in cash
- You can also invest up to £3000 from
stock market based investments
- And up to £1000 per year in the form
of single and investment based life insurance policy.
Then tax year is from
the 6th April to the 5th April.
Unfortunately the maximum amount you can save
in cash per year is £3000 so if you want to enjoy the
maximum benefit of tax relief’s you’ll need to
invest in the turbulent stock market.
In an attempt to make ISAs popular amongst those
who currently don't save, the Government introduced a set
of product standards that ISA providers could adopt if they
wanted to "catmark" their ISA products. These standards
relate to Costs, Access and Terms (hence CAT), which providers
have to maintain to keep the "cat" kitemark.
There are a number of types of accounts, namely, Easy Access
Accounts, Notice Accounts, Bond or Term Accounts and Regular
Savers accounts.
Easy Access Accounts
Easy access accounts provide access to your savings instantly
or within a few days without a penalty. Due to this flexibility
a lower variable interest rate will be offered. These accounts
are particularly suitable as an emergency fund, providing
easy access, a way to start saving and some accounts offer
a cash card facility. A bonus scheme may be offered if the
numbers of withdrawals made are within a specified limit,
for example a maximum of 2 withdrawals per annum. The minimum
investment is normally £1.
Notice Accounts
Notice accounts generally pay higher rates of interest and
require notice to be given before withdrawals can be made,
typically 30, 60, or 90 days. Savings can sometimes be accessed
immediately subject to a withdrawal penalty. The interest
rate is variable and the minimum investment required is often
several hundred pounds.
Bond or Term Accounts
Bonds or term accounts will pay more competitive rates, they
require your investment to be tied up for a specific period
of time and withdrawals before the maturity date are often
not permitted. If withdrawals are permitted without notice
there will sometimes be penalty charges. The interest rate
is often fixed and the minimum investment is generally £1000
or more.
Regular Savers Accounts
These accounts are to encourage regular savings; they require
a commitment to invest each month. Many regular saver accounts
will not permit lump sum investments. Access to savings varies,
some accounts may provide instant access or require notice
and others may be fixed term. Generally regular saver accounts
place a restriction on the number of withdrawals allowed each
year. Interest rates are variable and a minimum and maximum
investment per month is sometimes stipulated, these vary from
between £10 - £20 min and £100 - £2000
max.
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