So, you may have noticed a lot going on with ISAs at the moment. This is because we are approaching the end of the tax year (6th April – 5th April) and in order to use your annual ISA entitlement you will need to have invested it by this date.
But, with so many different ISA accounts to choose from, how do you decide which one is right for you?
Interest Rate
Cash ISAs can pay either fixed or variable interest rates. Broadly speaking fixed rates will tend to be higher and, although you may have to commit your money for a certain length of time, you are sure of what your money will earn you. Variable rates are generally a little lower, and subject to change, and allow you access to your money sooner (although you should always check this with your provider before committing).
Attractive-looking ISA rates will often be partially comprised of a bonus for an initial period. There are two things to mention here: check the small print as there may be conditions you have to stick to get your bonus; and always review your rate when the bonus period ends as often the rate will reduce to a pittance afterwards. Here's an idea, set a reminder on your phone for when your bonus ends so that you can review the rate you are getting.
Consistency
Haven't got time to keep switching ISAs, but want an account that pays a consistently good rate? Why not check out our Best Buys for the most consistent ISAs on the market?
Notice
With some ISAs, as with other types of savings accounts, you may have to give notice to withdraw your money, or forfeit some of your interest for the privilege of doing so. If you need access to your money, make sure you go for an ISA that allows instant access. If you like to dip into your savings and replace them, maybe an ISA isn't right for you – you can only pay in £3,600 a year, or £5,100 a year if you are over 50 (the limit will be £5,100 for all from 6th April 2010) – and you can only pay this in once; check out our Best Buys for a more suitable product. Alternatively, if you don't mind not having access to your money for a little while, why not consider a Fixed Rate ISA?
Transfers
Some providers will let you transfer your ISA balance from previous years over to them. So, even if you have no new money to invest this year, you can still see if you can get a better rate elsewhere. It's particularly good to look at this time of year, as this is when rates are most competitive. If you don't know the interest rate you're currently getting, why not try your provider's website?
All providers are required by law to allow you to transfer out of your ISA within 30 days of your request (although watch out: they might charge you a penalty). If you are looking to transfer to another ISA, make sure that you do it properly- talk to your new provider who will help arrange this for you.
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