ISA Savings

So you’ve got your cash ISA, maybe even your stocks and shares ISA investment all tied up and comfortable, and you’re sitting back, relaxing, patting your self on the back because you got a great deal on the interest rate, and the tax man wont touch your savings.

But don’t get too smug, it doesn’t, or at least shouldn’t stop there.

If you’re a smart investor, and if you’re interested in ISA savings there’s a fair chance you are, then you’ll know that high street banks and building societies are always competing with one another to offer the best rates, and best incentives to get your money invested with them.

But here’s the thing, while you can shop around for the best place to put your ISA savings, and you’re free to transfer to a new account (once a year, remember you can only open one account a year), you should always check the small print of your current ISA savings account, as they may charge for the privilege of you putting your own savings with another financial institution.

Often, if there is a charge to switch to a new account, the difference you could make in interest may more than cover the cost of this one off fee, but be careful and do the maths first.

One final, but very important note is you must avoid withdrawing your savings from your ISA at all costs! The moment your money is out of your ISA, putting into another account eats into your ISA deposit limit for that year. As an example you transfer your ISA savings from one account to another, say £3,000, into a new ISA at a better rate, you can still invest a full years worth of NEW savings into that ISA account. BUT, if you withdraw that £3,000 of ISA savings from your old cash ISA, and deposit it into a new ISA account, you’ve just used up £3,000 of your annual cash investment limit, even though that money originally came from an ISA.