| 3rd August 2018

Guide to a Cash ISA

If you aren’t prepared to jump in at the deep end, a Cash ISA can be a stepping stone to riskier investments such as stocks and shares or innovative finance. Our guide to Cash ISAs includes answers to questions like, “what is the difference between an easy access term or fixed term?”, “what are the risks?” and “can I transfer my money if I find a better deal?” We have tried to avoid using jargon in our guides; however, if you need some extra help, check out our glossary.


What is it?

A Cash ISA is a tax-efficient way to save. Interest earned on the money held in your account is tax-free. Cash ISAs can be set up through a variety of independent providers banks, building societies, and the Post Office. As long as you are a UK resident and over 16 years old, you can start putting your money to good use.

Easy or fixed access?

You will need to pick between setting up an instant access account or fixed-rate account. Easy access allows you to withdraw funds at any time whereas fixed term means that funds are likely to be inaccessible for a length of time. You may even find yourself facing a penalty for withdrawing funds early. As your money is secured in one place for longer, fixed term ISAs are likely to generate more money in interest compared to easy access (aka variable) ISAs.


Cash ISAs are neither here nor there in regards to risk; the level of safety is akin to a regular savings account. However, be aware that markets can increase and decrease at any time meaning that you may make little to no earnings. Don’t be afraid to transfer your existing funds to an ISA with bigger earning potential.


If you decide to open a Cash ISA and later choose to change, we’d advise against just withdrawing your savings as cash and transfer it into the new account; you will risk losing out on the tax benefits.

If you do find an ISA you think would be a better fit for your investments than your current one, you aren’t limited to keeping your funds in one place. It might be worth transferring your allowance so that you reap the rewards of better interest rates over a shorter term.

Financial advice

At this point, it’s worth having a chat with your financial advisor to explore your options and see how to transfer your allowance most efficiently.

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