5 Tips for Getting the Best ISA Rates
This article guides the reader through the main tips to enable they are getting the best ISA rates that are possible.Individual Savings Accounts, more commonly known as ISAs, allow UK residents to save money without having to pay tax on the interest. In order to maximise your profits, you need to look out for an ISA that offers a good rate of interest. However, finding the right account is not always as simple as comparing advertised interest rates and picking the highest. Take a look at these five top tips for hunting down the best ISA rates that are currently available. 1. Watch Out for Introductory Bonus Rates
Some accounts promise very good rates of interest, but if you read the fine print you will realise that the attractive rate does not last for very long. Always make sure you know exactly how long the initial interest rate will last, as well as what the rate will drop to once the introductory bonus period ends.
Accounts that offer introductory high rates of interest can be used very effectively. You can put money into the account to earn a high rate of interest for the first few months, then move to a different account when the rate drops.
2. Use ISA Transfers to Keep Interest Rates High
If you already have money invested in ISAs, then you could get a much better deal by moving the balance to an account that offers a better rate of interest. In order to move your money, you need to contact the institution that provides the account that you want to switch to and complete a form to approve the transfer. The bank will handle all details of the transfer for you.
3. Should You Fix the Rate of Interest?
ISA rates can be either fixed or variable, and it is important that you understand the difference between these two types. Choosing a fixed ISA guarantees that the rate of interest that you are paid will not decrease for a certain period of time - but on the other hand, you will not benefit if interest rates rise. Interest rates have been at a historical low for the last couple of years, which leads many people to predict that they will rise in the near future. At the very least, they are unlikely to fall much further. For this reason, you should only choose a fixed interest rate if it is attractive compared to variable rate ISAs.
4. Can You Lock Your Money Away?
One way that you can get a good deal on a fixed rate ISA is to agree to put your money into the account and leave it untouched for one, two, three, or even five years. You can get ISA rates of up to 3% by using this method, whereas instant access ISAs rarely carry interest rates of even as much as 2%.
Note that you will have to pay a penalty if you need to close your fixed rate ISA and withdraw or transfer the money before the end of the fixed period. The size of this penalty is usually related to the amount of interest that you earn. Typical penalties can be 90, 120, 180, or even 270 days of interest. If you have not yet held the account for this many days, then you could get back less capital than you put in.
The golden rule is to always carefully read the terms and conditions of any ISA that you are considering. Make sure you know how much notice you are required to give of withdrawals, and whether or not you will be required to pay a penalty.
5. Compare ISAs Online to Find the Best Deal
If you compare only a few providers when shopping for a new ISA, then you will miss out on the best deals that are available. The best way to get a full picture of all the accounts that are currently being offered is to go to a comparison site, select your requirements, and view all ISA products that suit your needs. As well as being the easiest way to compare interest rates, this method also allows you to quickly compare other account features, such as withdrawal notice periods, any fees or charges , and any special eligibility conditions that restrict which customers can apply for the account.Get FREE access to the highly acclaimed Business Mastery Insider's Secrets Club and tap into the latest business growth strategies, profitability applications, assessment tools, training and more.