We’ve seen more competition than we’ve seen in recent years, so now’s the time – you either take advantage of your allowance, or you lose it.
We’ve spoken to a number of industry experts to get their views and tips on ISAs.
The expert tips
Richard Brown, HSBC: Always make sure you use your ISA allowance as part of your wider tax planning, and just bear in mind that from April 2011 your tax free ISA allowance increases from £5,100 to £5,340.
Phil Sheehy, RBS/NatWest: A good tip is to ensure that you put the maximum amount in to an ISA every year. Research by moneysupermarket.com has indicated that if somebody had put in the full amount each year since ISAs started in 1999, they’d now have £35,700 saved – that’s a huge amount that is earning tax-free.
James Hillon, The Co-operative Bank: You should think really hard about how long you can afford to tie your money up for. Typically the longer that you can afford to put your money aside for the better the interest rate you’ll get.
PS: A key tip would be to really understand what type of ISA may be right for you. If you’re comfortable with a bit of risk then perhaps a stocks and shares ISA is better where the limit is a lot higher at £10,200. If you’re an internet banking customer, then potentially you may want to consider an internet only ISA, where often the rates are higher. I would just encourage everybody to really understand what’s available in the full range of the ISA market, and then assess what’s right for you.
RB: Using your cash ISA allowance should always be the first port of call for your savings, but just bear in mind that should you need to dip into your cash ISA then you do lose the benefits and won’t be able to top up again.
JH: I’d also recommend that you make sure that your ISA is the last savings that you dip into, as once you’ve taken the money out you might not be able to pay it back in and therefore you’ll reduce the amount of benefit you get.
RB: Always check the rate that you get on your current ISA – most banks and building societies by law need to advise you of the interest rate that you’re getting on your account through your regular statement. So understanding what rate you’re on at the moment should be fairly easy to do.
JH: In the current economic climate where every penny matters, it’s never been more important to minimise the amount of money you’re paying to the tax man. An ISA offers a simple and straight forward way of getting into the savings habit, whether that’s for you or for your children.