Five Questions On: Nisas

The new tax-free savings schemes that are replacing Isas?

They're not so much replacement as expansion. The amount you'll be allowed to stash in an individual savings account (Isa) will climb to £15,000 from next Tuesday, 1 July. Meanwhile you'll be able to switch your nest-egg between shares and funds and savings accounts.

How is that different?

Up until now you've only be able to move money held in an Isa from savings accounts to equity-based investments. From next week you'll be allowed to move money back the other way, if you wish.

Why is that better?

It makes Isas much more flexible, especially to those wary of stock-market fluctuations. If you choose to move your cash to shares or investment funds but then want to take profits or simply exit the market on worries of a potential crash, you can. You'll be able to park your cash in a deposit account until you're ready to return to more risky equities.

Will many people be using Nisas?

There could be massive demand with people delaying using them until the new higher limits and greater flexibility come into force. Figures published by the British Bankers' Association this week showed a massive drop in the amount people have been stashing in Isas in the past three months – savings were £5.3bn, down by more than a third from the same period in 2013.

So people have just been waiting?

They've also been put-off by record low savings rates. The average cash Isa interest rate is now just 1.58 per cent, according to Moneyfacts. A year ago it was 1.74 per cent. "People have also been looking at alternative homes for their savings, such as peer-to-peer platforms and a number of popular retail bonds," according to Andrew Hagger of MoneyComms.