Cash ISA

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Cash ISA

Under changes introduced in the 2008 budget, Cash ISAs are one of the two options for customers wishing to invest in an ISA.

The other is a stocks and shares ISA. Those choosing what would previously have been called a maxi ISA can choose to have both a Cash ISA and a Stocks and Shares ISA.

An ISA is an Individual Savings Account. This has the same advantages as a building society account - low risk and easy access but the difference is that with an ISA - you pay no tax on the interest you earn.

Some ISAs offer bonus rates or guaranteed interest rates but you should read the small print to find out how long such rates are valid for - they may be offered as an introductory sweetener and then lowered after a certain amount of time.

You can transfer your ISA to another provider that offers a better rate. Remember though, you can't close your ISA, withdraw the money and then reinvest it in a new ISA - you have to transfer the ISA from one institution to another. To do this, simply tell the new bank or building society that you want to switch your ISA to them and they will arrange the transfer for you.

Check to find out whether your provider will charge you for this before opening the ISA.

Anyone over 16 can open a cash ISA, though there will only be a benefit in doing so if they are earning enough money to pay tax.

Below are links relating to Cash ISAs:

ISAs are an excellent way to invest your money tax-free. For other ways to pay no tax on investments, see our section on www.Investments.co.uk/Investing_for Children/tax-free_savings plans