Best Cash ISAs

Feb 29, 2012   //   by Kyle Needham   //   Banking and Savings Accounts  //  Comments Off on Best Cash ISAs

Cash ISAs

Which is Best? How do  I  choose?

All UK  citizens have access to a ISA (individual savings account) allowance. Cash ISAs are a type of ISA which holds cash, you can deposit  up to  a  certain  amount into it and  receive  interest tax free.

Cash ISAs were first introduced in 1999 to replace other tax-exempt accounts. They were created to be  available  to a wider range of people    and more  accessible. They have changed considerably since 1999. Notably, several variations of cash ISAs have since outlived their worth or else been scrapped.

When looking for a cash ISA it is important to check how they will perform after the first year, when rates can fall away. Checking through ISAs to see which is best in the long term can be a  daunting task. Fixed-rate ISAs will guarantee a rate of return, but offer severe interest penalties for withdrawal. For instant access cash ISAs, see our post on how ISAs perform after one year to help you understand the best long-term options.

Currently the best cash ISA  available is the Nationwide at 3.1%.

Best Cash isa Nationwide

What should  I  remember  when opening a cash ISA?

The most important rule is the annual cash ISA allocation. The limit of £5,340 per tax year includes all deposits regardless of withdrawals. Therefore, should you deposit £1,000 and then withdraw it again, your  maximum limit has still reduced to £4,340 (for the same tax year). Should you ignore this, you could end up losing out on  significant  tax advantages.

Should you wish to transfer your cash ISA from one provider to another to keep up-to-date with the best rates, the new provider must conduct the transfer. Should the account holder withdraw funds manually, they will no longer be counted as tax-free, which would  ultimately defeat the purpose of a transfer.

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