If you’re looking for a sure-fire way to build up some interest on your savings, it’s a good idea to think about investing your cash in an ISA – here’s why.
Regardless of how much spare cash you’ve got lying around, whether £500 or £5,000, it’s always worth thinking about how you can make it earn on your behalf.
ISAs are particularly useful when it comes to getting a return on your money because they generally offer competitive rates – and they allow you to keep everything that’s earned.
That lovely tax free status means you pocket the lot without HMRC dipping its fingers in. Here we explain how you can find the best ISA rates 2013/14.
Compare the best Cash ISAs 2013/14
When shopping around for the best cash ISA for 2013/14, you need to bear in mind that there is a limit to how much you can deposit during any one tax year. The Cash ISA allowance 2013/14 stands at £5,760, set to rise to £5,940 from April 2014.
Likewise, you can only pay into a single Cash ISA in each tax year which makes choosing your account even more important; once you’ve made your first payment, you can’t change your mind and pay into a different one even if you transfer out first.
Opening your savings account
Before you open a best Cash ISA 2013/14 account, you’ll need to check what the minimum opening amount is – in other words, the smallest amount you could save would need to be higher than this minimum.
This varies depending on the company, so some will be quite a lot higher than others. Some account providers may advertise a minimum amount but still let you hold less in the ISA than that – however the interest rates offered will be far lower.
This is why you should check the small print and compare deposit terms carefully when looking around for the best Cash ISA rates 2013/14.
Interest rates and account duration
It’s tempting to go straight for the account with the highest rate of interest, as that way you stand the best chance of making a hefty profit. However it’s not quite that simple, as the best Cash ISA 2013/14 rates depend on the type of account you want.
If you need easy access to your savings, it’s no use comparing rates on fixed accounts. Instead you should look for the best rates on accounts that will suit your saving style.
If you are prepared to lock your cash away for a number of years to get the very best ISA deals 2013-14, you must be certain that you won’t need it in the meantime. However these fixed term accounts also offer fixed interest, with better rates paid the longer the term you commit to.
If rates climb nationally you won’t then benefit with a fixed rate ISA, but this works the other way too and if wider rates plummet you’ll be protected. Accounts paying variable interest fluctuate in line with those changes.
ISA access and withdrawals
When you compare ISAs 2013/14 you’ll find that most accounts have strict conditions when it comes to access and early withdrawals.
Fixed accounts typically won’t let you make any withdrawals – you’ll only be allowed to close the entire account, subject to a deduction of so many days’ interest.
On the other hand access accounts may only allow you to make withdrawals up to a certain amount; or limit the number of your withdrawals; or allow all withdrawals provided you give enough notice.
Choosing the wrong account could undermine all of your initial good work in finding the best rates, so it’s vital that you choose an account-type that suits you and work from there.
Best ISA transfer 2013/14 deals
It’s possible to transfer your ISA from one provider to another if you opened an account in a previous tax year, or your easy access account won’t penalise the transfer.
In the same vein you might want to transfer this year’s ISA to a new provider when the 2014/15 accounts start competing for your custom.
You might want to do this if a bonus rate has ended or if interest rates have picked up and you can get a better deal elsewhere.
If this is something you’re considering, it’s important to make sure you’ve researched how to do it and that your current ISA will let you, as well as the account you want to move it into.
If it’s done properly then you will keep your tax benefits and it won’t count towards your allowance for the current tax year.
Remember to make an ISA comparison 2013/14 to find the right transfer account for you, and check our guide How to transfer your Cash ISA to learn more about the switching process.