UK Investments: Best cash ISAs
Each year, investors scour the pages of financial guidance magazines or hit price comparison websites to discover what the best current ISA deals in the UK are. In this competitive and ever-changing market, new ISA products are being created frequently by financial institutions keen to attract potential investors.
As such, finding the best ISA deal is not simply a case of scanning for the company that offers the best rate of interest for your savings and stating its name. As has been explained previously, offers change and new offers supersede old, meaning that what was once the best ISA deal on the market is quickly replaced with a new offer.
So to find the best offers in the UK, you need to understand what to look for when comparing deals. Understanding these simple concepts will allow you to sort through the vast number of cash ISAs available to find the one best suited to your situation.
- Check the interest rates offered: An obvious point it would seem, but it is important to check out both the interest rate you will receive during your introductory period and what it will revert to when the introductory period will expire. For example, if one ISA offers 3.5 per cent interest over 12 months, reverting to two per cent thereafter, this is not a good a deal as an ISA offering 3.2 per cent over 12 months, reverting to 2.5 per cent thereafter – unless you plan to transfer your account at the end of the introductory period. Make a note of the introductory period to ensure that you are aware when the higher rate of interest being paid on your savings will come to an end.
- Check for any penalties you will pay if you access your money: If possible, you should always try to keep your money in your ISA without touching it. This means it accrues the maximum benefit for the investor. Remember, if you withdraw money from an ISA, it still counts towards your yearly allowance. So, if you have invested £5,340 in a cash ISA and withdraw £1,000, you cannot reinvest a further £1,000 in the same financial year to top it back up. If you think you may need access to your savings, you should check for any penalties you would be liable for if you do and perhaps choose an account that grants easy access to your funds for no charge.
- Are transfers allowed? If you have ISAs from previous years and are seeking to open a new account at a better rate, you need to check that the ISA will accept transfers from other schemes. Many ISAs do, though there are restrictions about which type you can transfer from and to. For example, you cannot transfer money from a previous year’s stocks and shares ISA into a cash deal, but you can transfer money from a previous year’s cash option into a new cash ISA or new stocks and shares scheme.
Using these three simple rules means you are able to sift through the many options on offer to find the best cash ISAs deal suited to your situation.
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