ISA Bank

By: EconomyWatch   Date: 25 September 2009

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EconomyWatch

The core Content Team our economy, industry, investing and personal finance reference articles.

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An ISA bank is an ordinary bank or a high street bank that offers Individual Savings Accounts. One can buy stocks and shares ISAs from high street banks while cash ISAs can be bought from any bank that offers ISAs. Fund supermarkets, building societies, brokers and Post Office® also sell ISAs. The important point is that one should opt for a bank that offers a competitive interest rate with a guarantee that the interest rate will remain higher than the Bank of England’s base rate.

Choosing The Right ISA Bank

The ISA bank account you choose will influence the cost of owning an individual savings account. Banks will not charge any fees for cash ISAs, since ISA banks normally establish an interest rate that would cover their costs. Banks charge an annual management fee and setup fee for stocks and shares ISAs. Apart from costs, you should consider the following facts when choosing the right ISA bank.

Risks and Performance: Investing in cash ISA is more secure than investing in stocks and shares ISAs. The risks and rewards associated with stocks and shares ISAs are than those associated with investments in a bank or a building society. The value of stocks and shares ISA will fluctuate and the performance can never guarantee future returns. If you want instant cash, it is better to opt for a cash ISA. ISA banks generally offer cash ISAs that have low risk, managed funds that have low-to-medium risk and specialist equity funds that have very high risks.

 

Timescale: One should consider stocks and shares ISAs from an ISA bank as a medium to long term investment. A long term investment would offer positive returns, despite short-term ups and downs. One should opt for a cash ISA if one wants the flexibility of withdrawing the money any time.

Some ISA banks offer a base rate guarantee with a rate either matching or exceeding the Bank of England’s base rate. They allow opening an ISA bank account with as little as £1, with a cash limit of £3,600. They also offer an instant access account that lets a person deposit or withdraw the amount anytime.


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Most Popular in ISA Individual Saving Account

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