We show you how to find the best ISA rates to make the most of your 2012 ISA allowance.
With your annual ISA allowance up to £11,280 for the current tax year - £5,640 for cash ISAs – it is even more important that you find the best account to grow your savings tax-free with the best ISA 2012/13 has to offer.
However, the best ISA 2012 can offer you will likely be different to the best ISA rates 2012/13 can offer your friends and family. This is because we all have different amounts of money already in savings, are looking to save different amounts, and need different levels of access to our money.
Therefore the first thing you need to do is decide the type of Individual Savings Account you need; essentially, what you want from your 2012 cash ISA. For example, do you want an accessible, best buy cash ISA 2012 for instant access? Or, would you prefer to lock your money away for a set period to benefit from the high interest offered by the best fixed rate cash ISAs 2012?
Instant access cash ISAs
Instant access cash ISAs let you withdraw your funds whenever you want, and are therefore ideal if you want to save but need to be able to access your money in order to meet unexpected, external costs that may arise.
The best instant access cash ISA rates 2012 can offer are often reserved for accounts with higher balances, for example those that hold £20,000 or more. As these balances are often above your ISA allowance for a single tax year, you should look at whether you can benefit from these top rates by transferring one or more of your existing ISAs into the new account.
However, some accounts don’t accept ISA transfers so, this is something you should check upfront whether you are simply looking to consolidate your savings in a single ISA for ease of management, or need to move existing ISA savings to an account that offers a better rate. In both instances you should only consider accounts offering the best cash ISA transfer rates 2012.
Some Cash ISAs do offer their best rates on balances of £5,640 or below so you can use your annual cash ISA allowance to open an account and profit even if you need to make a separate ISA transfer too.
To make sure you are eligible for the best cash ISA rates 2012/13you need to make sure you check the minimum amount you need to keep in the account to qualify for the headline interest rate; this could be £1 but it could be £500 or even as much as £20,000 if you’ve saved in an account that accepts ISA transfers. This can catch you out and disqualify you from the headline rate for a month (or more), if you dip below the required balance.
Although instant access cash ISAs generally let you withdraw money as and when you want, some limit the amount of withdrawals you can make a month or year without impacting the interest rate. If you exceed this limit you could find yourself hit with an interest penalty that would impact your account’s growth even with the best rates from the top cash ISAs 2012.
You should also check whether you need to deposit a certain amount a month to qualify: if you can’t meet that commitment, you won’t benefit from the headline rate even if you’ve secured one of the best cash ISA rates 2012can offer.
Finally, once you find the best cash ISA 2012/13 you should check whether the headline interest rate includes an introductory bonus. If so, how long is the bonus period and how far does the interest rate fall when it ends? If you won’t be motivated to change ISAs when the introductory bonus period expires, you could lose out in the long run.
Fixed Rate cash ISAs
Fixed rate cash ISAs lock the interest rate your money will earn for a certain period of time, during which you won’t be able to withdraw the money without closing the account (with associated cancellation fees).
To get the best fixed rate cash ISAs 2012 has to offer, you’ll need to consider many of the same features as with instant access cash ISAs: namely minimum balances, whether transfers-in are allowed, and if you need to, or are able to make continued deposits into the account across its term.
However, unlike instant access cash ISAs you also need to consider the length of the term for which the rate applies and find out if you’re able to withdraw money during this period; some fixed term accounts permit you to do this subject to an interest penalty that will affect your return, while others prohibit it. As such you should only consider saving in a fixed rate ISA if you won’t need access to your money during the fixed rate period.
This means that fixed rate cash ISAs with shorter terms are more appropriate if you are likely to need access to your money in a year or two. This sometimes means compromising on interest rates, with the best fixed rate cash ISAs 2012 generally lasting for a longer term, e.g. 4 or 5 years. However, it a shorter term does give you some protection from incurring fees by closing your account early.
Overall, if you compare the best cash ISAs 2012 based on the type of account you need, and filter the results by whether you are eligible for their headline rates, you will be able to choose the account that offers you the best cash ISA rates 2012/13.
