Know how your savings stack up with a fixed rate cash ISA


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The Independent Online

Some of us like to have all the t’s crossed and i’s dotted, especially when it comes to our money. If you are planning on setting up a cash ISA, it’s good to know that you can choose one that offers a fixed rate of interest. That way, you can work out exactly how much you’ll get back over the term of the ISA – and be better prepared for the future.

Saving for the future can be much easier if you have something in particular to save for. If you are saving for something specific, like a deposit on a house, a new car, or even your wedding or honeymoon,  a fixed rate cash ISA could be just the thing to help you make your money go that little bit further.

A cash ISA is a savings account that pays you tax-free interest on your savings. So, assuming you’re a basic rate taxpayer, instead of paying 20p on every £1 you earn in interest to the taxman, you get to keep it all.  Tax treatment depends on individual circumstances and may change.

Some ISAs give you a variable rate of interest, and others like the Halifax ISA Saver Fixed, give you a fixed rate of interest – so you know exactly how much interest you’ll earn over the life of the account. Which means you can better plan for whatever it is you’re saving for. You need a minimum deposit of £500 to open this account, and you can save up to the maximum cash ISA allowance of £5,640 for this tax year ending April 5 2013. Please bear in mind that there are no withdrawals or additional deposits allowed during this term, you can access your money by closing the account early, but this will result in loss of interest and you may get back less than the original amount you deposited.

When you  set up a fixed rate cash ISA you need to think about how long you can leave the money untouched for – this could be anywhere from one to five years. The longer you can leave it alone, the greater the rate of interest you’ll generally receive. With this particular cash ISA, you get a fixed rate of interest, so you can work out exactly how much interest you’ll earn over the life of the account – and what you’ll have to spend once the account matures.

Our best ISA to place your money in, if you are happy to leave the cash untouched from between one to five years, is the ISA Saver Fixed account – it could be just the thing to help you reach your saving goals.

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