Regular Savings Accounts

Regular Savings Accounts

This type of account is aimed at people who can commit to making regular savings and deposit money into the account each month. A certain number of monthly payments have to be made into these accounts each year to prevent loss of interest or closure.

They often pay superior annual rates of interest by giving savers an annual bonus payable as interest on top of their interest rate. However, with some accounts, if you fail to make the required deposits you will lose the annual bonus.

Some accounts limit the amount you can put in each month and most accounts limit the number of withdrawals you can make each year, so they aren’t much good if you need access to your money quickly.

ISAs

Any individual aged 16 and over who is resident in the UK for tax purposes is eligible to open to an Individual Savings Account (ISA). You can choose to save in a cash ISA or invest in an equity ISA (stocks and shares) or a combination of both.

The returns from these accounts are free of income tax and capital gains tax, but the maximum cash investment permitted per tax year (April 6th – April 5th) is £3,000. An equity ISA, also known as a maxi ISA, allows you to invest up to £7,000 allowance in stocks and shares or to combine your stocks and shares investment with cash. You cannot have both a maxi and mini ISA in the same tax year.

Withdrawals may be made from the account, but once the maximum amount has been deposited in any year, no further deposits will be permitted that year, regardless of how much is withdrawn.

While cash ISAs do not always offer the highest interest rates in the savings account market, after tax you will find the best ones easily beat the higher-paying ordinary savings accounts.