The new tax year has begun, which makes now a great time to kick-start your personal finances. In particular, the coming days could be the perfect time to open up a new cash ISA account and make the most of tax-free savings! Here’s why savers should consider opening a cash ISA now.
Early-bird savers make the most of their ISA savings!
You may have heard that early birds rap the most benefits from ISA savings accounts. This means that people who invest in an ISA early in the tax year typically see the highest returns. It’s because early birds are able to take advantage of year-round price increases, from the beginning to the end of the tax year. Therefore, these next few days are the prime time to open up and invest in an ISA account!
Early-bird advantages won’t stop with stocks and shares ISA accounts. Those who open cash ISAs may be better off by saving early too! This is because saving into a cash ISA early in the tax year will give your savings more time to accumulate interest. Cash ISA holders can earn up to £1,000 in tax-free interest on their savings each tax year.
Why is now the perfect time to open a cash ISA?
Some might say that cash ISAs have lost their appeal in recent years. Instead, stocks and shares ISAs have grown in popularity due to the seemingly higher rates of return that they offer.
However, interest rates are on the rise, which could be excellent news for cash ISA account holders. Both high street giants and smaller cash ISA providers are set to raise their interest rates in the near future to keep up with customer demand.
The Bank Of England has recently raised its base rate to 0.75% and plans to increase this further before the end of the year. Savers who invest in a cash ISA now will be able to take advantage of future rate increases and earn maximum profits on their savings.
Furthermore, investing in a cash ISA early allows you to set yourself up for the rest of the year. Cash ISAs offer easy access to savings, which means that you can take money out of your ISA whenever you need to. Investing in a cash ISA now could help you to build a financial safety net to survive inflation.
The Bank Of England expects inflation to rise to around 8% this spring! Therefore, it is wise to save every penny while you can and make the most of tax-free earnings.
The best cash ISAs for 2022-2023
To view our full list of cash ISA recommendations, take a look at our top-rated cash ISAs. The best ISA account for you will depend on what you’re looking for.
Easy access cash ISAs allow you to access your savings at any time. This can be a fantastic option for those who want to use their ISA account as an emergency savings fund. However, easy access accounts typically offer lower interest rates in return for flexibility.
Alternatively, fixed-rate cash ISAs often offer higher interest rates. However, these savings accounts come with less flexibility, and many place penalties on withdrawals. If you are easily tempted to spend your savings, a fixed-rate cash ISA may be the best option for you.
Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.