Question:
I have just opened a Halifax ISA Saver Direct with a variable rate of 5.55%. I only intend on putting £100 a month in. I was originally going to put it into a regular savings account but someone recommended I put it into an ISA. But I don't fully understand ISAs...
Answers:
I really feel I have to correct some inaccuracies here. You can only pay into ONE mini cash isa in a year. The best site for info for you is
www.moneysavingexpert.com
Hit the banking/saving tab and look for "the best isa" there is info in their explaining "what is an isa" It explains it in really easy language.
In an nutshell a cash ISA is just a savings account that the government allow you to keep the interest without paying tax on it. You are allowed to pay into only one cash ISA at a time but you can hold many cash ISAs as long as you don't pay into more than one in any year. You are allowed to save £3000 in that ISA in a year.
Hope that explains it. Please check up the web site above, it really explains a lot of financial stuff in a really easy to understand way and has tables with all the best banks and interest rates. There's a great forum too where you can ask lots of questions.
All the best.
ISA's are good - the benefit of an ISA (Individual Savings Account) is that money you save you don't pay tax on the interest - it's a government backed scheme to promote investing. You have what is a mini ISA - where you can invest up to £3000 per tax year.
you can also get stocks and shares ISA's in which you can invest another £3000. this is also another type of mini ISA
you can either can have 1 or 2 mini ISA per tax year - however only 1 can be a cash ISA - i.e - you are not buying units or shares.
or you can have one Maxi ISA in which you can invest up to £7000 in stocks and shares and have no cash ISA
this is each year - when a new year start you have a noumber of options
1) keep paying the money in and do nothing
2) Transfer you money to another ISA - you can still pay your £100 a month
3) keep the money in that ISA, open a second ISA and put new money into the 2nd ISA - you can have as many ISA's as you want, however you can only pay into 1 maxi or 2 mini's (1 cash + 1 stocks and shares each tax year)
i hope this isn't too confusing
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