ISA is regarded as as a combination of savings and investment and millions of citizens in the UK have profited from it ever since it began. Unlike its predecessors Personal Equity Plans (PEP) and Tax-Exempt Special Savings Account (TESSA), this new savings scheme was designed to encourage all classes of UK consumers to deposit money on banks where their ISA savings will contribute to the nation’s economic stability. An Individual Savings Account allows savers to build up their money from a tax-free saving.

Depending on the bank, ISA interest rates differ from the very low to the high. Access to funds also vary since some ISAs have a certain notice periods and fixed terms where your money should stay where it is upon the end term while some ISA polices allow savers to easily access their cash.

The basic kinds of ISAs are Cash ISA and Stocks and Shares ISAs. A person should be 16 years of age in order to open a Cash ISA while the minimum age to open a Stocks and Shares ISA is 18. Moreover, for people who were born before April 5 1960, a sum of £10,200 is their ISA allowance every year and for persons who are born after April 5 1960 has an ISA allowance of £7,200 but these sums is supposed to be raised to £10,200 by April 6 2010.

What significance do April 5 and 6 have? It’s because April 5 and 6 are the end and start points of the tax year, correspondingly. Furthermore, it is suggested that you use the allowance you acquire from your ISA prior to theending of the tax year or else you will lose it by April 6 which is the commencement of a new tax year.

Because of the current economic state, the Bank of England’s base rate has sunk to a mere 0.5% annually. So it’s best to shop around for ISAs so you can decide on an ISA rate that is much higher. Unfortunately, the slow economic recovery is further dragging down ISA interest rates to as low as 0.1% annually. To have a clearer picture of how low this rate is, multiply an amount by .001. Presently, the highest interest rate you can get on an ISA is a maximum of 2.75%.

Other ISA arrangements can even offer higher yearly rates of more than 3%. A five year fixed term for an ISA can give as much as 4.6% yearly and this form of ISA can be compared to time deposits. When opening this sort of ISA, be sure that the amount you are going to deposit is a decided amount given that you won’t be able to have access to it within the term.

If you already have an existing ISA account, you can also opt for a balance transfer to another bank that offers a higher rate. But you should not withdraw your ISA money and close the account because that is not how it works. What you need to do is let your current provider transfer the account to the new one.

In order to circumvent the long lines of opening an ISA account, don’t wait to open an ISA account at the early possible time. Between March to the first week of April, it has been proven that more people open ISA accounts than other time of the year. If you open an ISA in a much earlier date, you will earn money much sooner and you will also be spared from the hustle.