Getting to know the ISAs

To encourage the habit of saving, the UK government set in motion the ISA scheme and sweetened it by appointing the investments made in the scheme tax free status. This is a very crucial differentiator and has prompted many to seek the best ISA rates and take advantage of ISA interest rates to park their funds.

Since there are several types of ISA schemes, it is necessary to compare ISA rates of each of the schemes before putting the money. Essentially, there are two forms – the Cash ISAs and the Investment ISAs. The Cash ISA is pretty similar to the normal savings account, except that you are not required to pay tax on the cumulative amount you would receive on maturity. This results in more money into your hands.

Within the Cash ISAs, though, there are different types such as the floating and fixed ISA interest rates. Since these will vary depending upon market conditions and every institution offering such schemes have their methods of dealing with it, you would do well to compare ISA rates offered by different institutions and then decide which one would be suitable for you.

The Investment ISA requires you to place your investment in funds which in turn play the stock market and offer varied returns.