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Make your money go further with cash ISAs

Cash ISAs are a great way to keep your savings away from the tax man – but the world of tax-free savings can often be a little confusing. Who should you take your ISA with? Will you manage your account in person, over the phone or online? And what is the difference between a cash ISA and a stocks and shares ISA? Take a few moments to read our handy guide to cash ISAs and we promise to answer all these questions for you, so that you can figure out if cash ISAs are the right choice for you.

What is a cash ISA?

Cash ISAs allow you to invest a certain amount of money each tax year, without paying any tax on the interest accrued. The tax year runs until the 5th April, and until 5th April 2014, you can invest up to £5,760 tax-free. So your savings will be safe, and you won’t pay a penny to the tax man.

What to look out for

Not all cash ISAs are created equal, and when you’re hunting for the best account for you, it’s important to know what to look out for. Here are a few things it’s well worth considering before applying for an ISA:

• Do you have a preferred bank?

• What is the interest rate on offer?

• How can you manage your ISA? (for example, online, over the phone or in branch)

• Is there a notice period required to withdraw your cash?

• Is it a cash ISA or a stocks and shares ISA (linked to the stock market)?

By considering the answers to these questions, it should be easy to find the right ISA to meet your needs. It’s also important to keep an eye out for ISAs which offer fixed bonuses at the end of the year, as if you’re saving a significant amount, this could really top up your savings!

Cash ISAs or stocks and shares ISAs?

Stocks and shares ISAs are usually considered a more risky investment – your savings are linked to the stock market, which means if it crashes, so do your savings! With a cash ISA, your savings are as secure as they are in a traditional savings account, with the added bonus that any interest you earn on your money is tax-free!

Comparing deals

It’s a great idea to use comparison websites to see various cash ISAs side by side – this way you can see which one is likely to suit your needs best. Then, you can head to the bank or provider’s website to look at the account in more detail. Often, you can apply for your cash ISA online, and the process is even easier if you’re opening your ISA with your existing bank.

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