ISA/Savings account? Confused...

PRINCE$$

Hi all,

This may be really stupid of me but I've read Martins articles and am still confused about what best to do. I'm wanting to save a small amount of money (£200-500 a month) and would want penalty free access to it should the need arise. I currently have A & L premier direct current account and a plusSaver though I have no idea what the saving one is and have never used it. I also have an HSBC current account and an old saving account with them that I don't use anymore.
Any idea whether I'd be best off with an ISA or a savings account? Also, my A & L current account pays 6.1%, is this not more than most savings accounts?
Any help much appreciated

Cheers

tom188

An ISA stands for Individual Savings Account. It is nothing more than a tax wrapper. A cash ISA is just a savings account that has no tax chargeable on the interest, which is subject to a maximum deposit of £3000 per year. There is nothing more complicated to it than that.

6.1% at basic rate tax is 4.88%, the top paying ISAs earn more than this, therefore an ISA is better.

thumshie

The 6.1% with your current account is only on the first £2500 anyway. if you did 'save' £500 a month after 5 months you'd only be earning 0.1% on everything above £2500.