There are a number of ways Cash ISA’s can be opened up including by going into a Bank or Building Society Branch, by post, over the telephone or over the internet.
The 2 main rules for choosing the best Cash ISA are
1. Go for the highest interest rate, alongside
2. The most flexibility in regards to your financial situation
Flexibility with ISAs usually means instant access, so that you can withdraw your money whenever you choose. Some ISA accounts pay a higher interest rate but are Notice Accounts meaning you have to give 30 days, 90 days or even 180 days notice to access your money. Your money is in effect locked up.
Most people want instant access. However those with large cash savings are often happy to lock up part of their money for a certain period of time in order to earn a higher interest rate.
This is why it’s important to look at your own financial situation in relation to the flexibility of the Cash ISA on offer.
If in doubt always seek flexibility even though it may mean accepting a lower interest rate. I would prefer to accept a rate of 3% with instant access to my money rather than 4% but having to give 90 days notice to access it.
Many banks and building societies have a £1 minimum to open an account, although the better paying ones might require over £1000.
Check to see if there is a limit to the number of cash withdrawals that you can make before losing interest.
Most Cash ISA accounts are instant access but some, often the ones with the best interest rate, have penalty restrictions such as only 4 cash withdrawals allowed per year.
Some ISAs which on paper offer great rates of interest may include what they call a ‘bonus rate’. This is an interest rate boost for a period of time but after that has expired savers often find the rate of interest is not so competitive.
Check to see if there is a limit to the number of cash withdrawals that you can make before losing interest.
Follow me on Twitter