An Individual Savings Account, or ISA, provides you with an excellent way to save money every year, but it’s only going to earn profits if you use it properly. Below are a few tips to help you get the most out of your cash ISA:
Make it Automatic
If you know that you want to deposit a certain amount of cash every month or year into your ISA, why not set your bank account to automatically deduct the amount and make the transfer automatically? This will ensure that you actually make the deposit (how many times have you forgotten?), and it will stop you from using the money that should go into your savings account.
Pay in Early
What’s the best time of year to deposit money in your cash ISA? Right after tax season! Deposit as much of your ISA allowance as you can right after you have paid your yearly taxes, and that will earn you the maximum amount of interest possible. The more you have in the account, the more interest you will receive throughout the year. Do not wait until the last moment to deposit the money, but get it in as early as possible!
Consider Fixed Rate
Do you need to tap into your money right away, or can you wait for a few years (5, 10, 15, 30)? If so, a fixed rate ISA can be the best way to go. You’ll get a much better interest rate with a fixed rate ISA, but you will only be getting that rate because you are committing to keep your money in the account for a certain period of time. The longer you keep your money in the ISA, the higher the interest rate and thus the more you will earn!
Find Online ISAs
ISAs may be more expensive when a physical bank offers them, but if you can manage the account over the Internet, you will find that they will usually be cheaper and offer better rates. Not only will it be much more convenient to track your account and earnings, but you’ll be able to earn more money in the long run!
Make Sure You’re Getting the Best Rate
Have you compared ISA rates among all of the banks and financial institutions in your city or country? You want to make sure that your ISA is paying the most competitive rates possible, so it’s wise to research the competition at least once a year. Perhaps you will find that your ISA’s interest rate has been cut due to financial hardship (for the institution controlling it), in which case you might be better served transferring your ISA to a different institution or at least an account with a better interest rate.
Understand the Rates
You may think that an account offers excellent rates, but those rates may only last for a few months to a year. These are called "introductory rates", and they may look appealing, but could end up with you earning far less over the next few years if the standard rate is lower. Make sure that you understand what the standard rate is BEFORE you agree to deposit into your ISA!
Follow these tips, and you’ll earn the highest amount of interest on the money you are saving. It’s all about planning for the future, right?