According to Lloyds TSB Savings, whilst many more do now understand Cash ISAs, it seems 18-24 year olds in particular need more help to understand their benefits.
ISAs do need to be a priority for savers as they offer tax free savings but for many of the younger generation it seems that more is needed to help their understanding of what Cash ISAs are and what their benefits are.
Firstly, many thought that ISA stands for Instant Savings Account rather than Individual Savings Account, others thought it stood for Investment Standards Agreement.
Whilst more people overall now know how much you can save in a cash ISA, only 30% of 18-24 year olds knew the limit this tax year is £5,100.
Critically with an ISA if you don’t use it you lose it – you lose the ISA allowance at the start of a new tax year and cannot top up previous years’ allowances.
You can transfer existing Cash ISA to a new provider. However, contrary to what many believe, in order to transfer you don’t withdraw the money and open a new ISA.
Whilst it is right that you can withdraw money from some ISAs, you would lose the tax benefit if you withdraw money to open a new ISA. Instead you go to your new provider and ask them to effect the transfer. Not all providers accept ISA transfers in therefore its beneficial to go through the correct ISA transfer process.
There are a large number of ISA Products available, including from Lloyds TSB their
Cash Saver ISA
The Cash Saver ISA offers a variable rate of 2.65% AER/ Tax free. This includes a fixed introductory bonus of 1.65% AER which has been extended from a year to 18 months from account opening. The account gives instant access and can be opened with as little as £1. Interest is paid annually on the 31 March.
Two year Fixed Rate Cash ISA
The Two Year Fixed Rate Cash ISA offers a fixed rate of 3.15% AER/Tax Free on all balances from £3000. Further deposits during the 2 year term up to the annual limit are also accepted. Interest is paid on the anniversary of the account opening and at the end of the term.
MoneyHighStreet.com comment: To get the best ISA deal to meet your needs you need to shop around and check beyond the headline rates. Don’t leave existing ISAs in a low rate account either. Check the rates you are getting and if need be switch to a better paying account.