Mini Cash ISA

By: EconomyWatch   Date: 25 September 2009

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A Mini cash ISA lets a person earn interest on a particular amount, tax free. Another component of an ISA account is stocks and shares. You can opt for a Mini cash ISA, if you are averse to risks and will not be able to hold your investments for a long time. Even if you choose to invest in shares and stocks ISA, it is better to invest some money in the cash option that would enable you to withdraw during emergencies.

What to look for in a Mini Cash Individual Savings Account

Most ISA managers will give people options for paying into the account. One could save with a monthly scheme or make a onetime payment or do both (i.e. invest a lump sum amount initially and make monthly payments). The limit for the cash component is £3,600 each tax year. The interest rate is the most crucial thing to consider when choosing your Mini cash ISA. Look for the best rate prevailing during the time of opening the account and ensure that the ISA manager will offer good rates going forward. Apart from interest rates, you should see if the manager will be charging any penalty for money withdrawals. Also some managers offer a guarantee that their interest rates will continue to be higher than the Bank of England’s base rate for at least a year. Also you can make sure that there is no penalty for switching accounts between providers when you find a provider offering better interest rates. If you do not want the easy access option in your cash ISA or Mini cash ISA, you can opt for a fixed rate ISA. This can be a good option when the economy is volatile.

You can switch your Mini cash ISA account to another building society or bank when the interest rate falls or is not inline with others. You need to inform your ISA manager of your decision and they will help you arrange the transfer for you. You should not close your account, withdraw the money and put it into a new ISA. It means a new subscription and you may lose some or a large part of your allowance for the tax year.


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Most Popular in ISA Individual Saving Account

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