i don't understand ISAs

RedCanadaHat

ive had an ISA for around 2 years and it's great for saving..and every now and then i get like 60p interest ontop of that. Is that all it's good for? I'm so clueless and the info the bank gives me makes no sense!

i'm a dumbass, yes!!

rb10

The great thing about an ISA is that any interest you receive is tax-free. If you have other savings accounts, you may have noticed that tax is always deducted, but this doesn't happen from the ISA.

Every tax year (starting in April), you have a £3600 ISA allowance - so this is the maximum you are allowed to pay in to it in that year. If you don't use all of it, you lose the rest, and start again every April with a new £3600 allowance. So it's a good idea to make sure that you've paid as much as possible of the £3600 into it each year.

Make sure you've got the highest rate - check out http://www.moneysavingexpert.com/savings/best-cash-isa

If you do want to change ISA, don't just close your existing one. Instead, go to the bank you want to open the new ISA at, and ask to transfer your ISA. This way, it doesn't count towards this year's £3600 limit.

Baldur

You can open a new Cash ISA each tax year so, if you had subscribed the maximum of £3,000 for the past two tax years plus the current year's maximum allowance of £3,600, you would currently have 9,600 (plus any accrued interest) earning tax-free interest - rather more than the odd 60p......