We all know that saving money is a good thing, but doing it can be hard. But soon, it’ll be a new financial year, which is the perfect opportunity to sort out your finances.
Anyone keen on stashing some serious cash will be pleased to know the new ISA limit for 2017/2018 is a cool £20,000.
If you’re unfamiliar with ISAs (individual savings account) it’s basically a type of account where any interest you earn on your money is tax free – the tax man can’t take a slice. So, if you managed to use your 2016/2017 ISA allowance then you should have £15,240 for this tax year nicely tucked away – earning interest tax free. If you haven’t, then don’t despair – you’ve got a few more days until the end of the financial year (5 April).
If you’re liking the sound of saving £20,000 tax free in the next financial year, then now is a good time to investigate ISAs so you can make the most of the allowance. The first rule of finding an ISA or Junior ISA is to consider whether you want immediate access to your money, in which case opt for an ‘instant access cash ISA’. The alternative is a fixed rate ISA – you’ll often get a higher rate of interest with these but you won’t be able to get your hands on your money until the end of the fixed period – so don’t put your money away here if you think you’re likely to need it.
Then you need to choose one with a good interest rate – because there’s no point saving all that money and not getting anything back on it – you might as well leave it under the mattress.
And just like any other bank or building society account, think about what kind of service you want. Do you want to put your money somewhere with a high-street presence or are you happy to manage everything online or by phone?
If you already have an ISA but are fed up with rubbish rates of interest, then why not switch to an ISA with a better rate? Beware though, that if you take it out and pay it back in, you may have used up part, or all of your allowance for the year. Instead, it’s best to choose a new provider that will accept a transfer in and tell them you want to switch; they’ll ask you to fill in some paperwork, but apart from that, they’ll handle the rest.
So, whilst January’s new year resolution might have fallen by the wayside, now is the time to make a new financial year one instead. Take a look at what an ISA can do for your savings and make the most of your tax free allowance – come on, it’s not every day you can keep £20,000 savings from the tax man and stay within the law – so let’s compare.