What is a Fixed Rate Cash Isa?

There are basically two types of cash Isa accounts. Attracting a higher interest rate, a fixed rate cash isa account requires one to tie up their money for at least a year. The other is the Instant access (easy access) Isa that you can withdraw funds from whenever need be.

tax free savings accounts

Isas are just savings or investments accounts excluded from tax and offered by building societies, insurers, asset managers, banks among other providers. Interest earned on funds held in a cash Isa is normally tax-free.

Income and capital gains from a stocks and shares Isa are not subject to tax as well. However, all dividends are deducted a certain percentage.

Finding the Best Fixed Rate Cash Isa

There are numerous cash Isas being offered by the different providers and it is upon you to choose one that suits you best. Don’t just go for one that promises to pay the best interest rates, because this may barely last. First, find out the rate you are on at the moment and if it’s unfavorable consider making the switch. You could find yourself earning more by this simple action every year instead of just letting your money lie in an account that offers a decent rate.

If need be, get some professional advice on cash transfer Isas so that you can make the best of your savings from previous years of taxing.

Other Considerations

Depending on the country, there are certain age requirements to opening an Isa account. Some have a restriction of 16 years for the cash Isa with the stocks and shares Isa requiring a minimum age of 18 years.

For those who prefer to carry out their transactions electronically, choose a provider that offers the online option because not all have this provision. It is important to note that your preferred mode of banking will have an effect on the rate offered.

Different providers also spell different minimum opening requirements as well as different withdrawal arrangements that are subject to a charge depending on the fixed rate on the amount withdrawn.

Always remember that the more funds you deposit when opening your Isa, the longer you will reap the tax-free benefits.

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