A complete guide to easy access cash ISAs
Want to power up your savings and make the most of your tax-free cash? But you also like to keep your money within a sensible arms reach? An easy access cash ISA could be the account you’re looking for.
So, you want to power up your savings and make the most of your tax-free cash? But you also like to keep your money within a sensible arms reach? Well, an easy access cash ISA could be the account you’re looking for. It brings together convenience and flexibility while allowing you to watch your savings grow with tax-free earnings.
But if the thought of tax laws and questions on how you earn interest has got you feeling overwhelmed, let us guide you through all you need to know about these handy savings accounts.
An ISA is an Individual Savings Account where you don’t have to pay any taxes on the interest you earn up to a set allowance. There’s an allowance for each tax year on how much money you can add to an ISA, and for the year 2023/24, this is £20,000.
You then have the ‘easy access’ element of the savings account, which lets you can withdraw your money at any point without losing your interest or incurring penalties.
An easy access cash ISA works almost identically to a regular savings account with one significant advantage – you don’t pay tax on the interest you earn. You can deposit money whenever you like (up to your annual ISA allowance of £20,000) and take out funds when needed. Unlike fixed-rate ISAs where your money is locked in for a specific term, easy access cash ISAs offer more flexibility. They’re ideal for savers who want the tax benefits of an ISA while keeping their funds within reach.
Picture your savings like a growing garden. With an easy access cash ISA, you’re free to plant (deposit) and pick (withdraw) your financial flowers (your savings) as you wish. And the big bonus? There’s no tax to pay on the interest you earn. This is the beauty of ISAs – they’re sheltered from tax, allowing your savings to bloom freely.
Yes, you absolutely can earn interest on an easy access cash ISA, and it’s one of the key reasons why these accounts are so appealing. Your money doesn’t just sit idle in an easy access cash ISA — it rolls up its sleeves and works for you by earning interest.
Unlike current accounts, which typically provide lower rates of interest, a cash ISA lets your savings grow over time. The exact interest rate will vary depending on your provider, so shopping around for the best deal is essential. So whether you’re maxing out your ISA or earning just a small amount of interest, every pound you have makes an impact on how much your money can grow.
An easy access cash ISA can be a perfect fit for so many people. They are particularly useful for those who want to earn tax-free interest but may need to dip into their savings now and then. Or suppose you’re just starting your savings journey or are uncertain about tying up your funds for a fixed period. In that case, an easy access cash ISA could offer the ideal balance between growth and accessibility you need.
The main draw of these accounts is their flexible nature that can suit so many types of savers while still helping you to make the most of your tax-free savings that you are eligible for.
Yes, we’ve got you covered with our easy access cash ISA. Our account gives savers next-day access to their savings if needed while keeping their tax-free earnings safe. Our easy access cash ISAs can be opened with as little as £1, and there are no penalties or charges for making withdrawals.
Because there is an annual allowance of tax-free savings that you can make each year, arguably, the best way to make the most of these ISAs is to max out your allowance. But also one of the biggest benefits of an easy access cash ISA is the flexibility you have to get to your money when you need it.
These ISAs are a secure place to stash cash for a rainy day and could also work as an accessible emergency fund. Or if you’re saving for a short-term goal like a holiday or home improvement, an easy access cash ISA allows you to earn interest while giving you the freedom to withdraw funds whenever necessary. You could also think of an easy access cash ISA as your financial chameleon. It adapts to your goals, matching you whether you need your money now for an unexpected expense or to keep you on track in stashing away money for that dream holiday.
Regular contributions are key to making the most of your ISA allowance. By consistently feeding your ISA, even with small amounts, you can benefit from the power of compound interest, where as you save and earn interest, your interest earns you interest!
There are some big advantages to keeping your money in an easy access cash ISA:
Flexibility: The ability to access your money whenever you need it is a significant advantage, especially when unexpected expenses arise.
Tax-free interest: All the interest you earn is tax-free, allowing your savings to grow faster than in a taxable account.
Security: Most ISAs, including those from OakNorth, are protected by the Financial Services Compensation Scheme (FSCS), offering peace of mind to savers on their money up to the value of £85,000.
Despite the benefits, there are some factors to weigh up before choosing an easy access cash ISA as the home for your savings:
Interest rates: They may not be as high as those offered by fixed-rate savings accounts or investment ISAs due to their flexible nature, and these rates can fluctuate down as well as up.
Annual allowance limit: There is a cap on how much you can deposit into all your ISAs combined in one tax year. So if you’re a big saver, you may want to weigh up they best way of spreading your savings across multiple accounts and even other investment choices.
While these terms might be used interchangeably, they aren’t exactly the same. An easy access ISA is a type of cash ISA. So, all easy access ISAs are cash ISAs, but not all cash ISAs are easy access ISAs. A ‘cash ISA’ is a broader term that includes all ISAs where your money is saved in cash, including both easy access ISAs and fixed-rate ISAs. The ‘easy access’ label specifically refers to cash ISAs that offer the flexibility to withdraw and deposit money whenever you like without penalties.
While they offer a lot of freedom, there are a couple of conditions with an easy access cash ISA, the biggest being the annual ISA allowance. This is the maximum amount you can deposit across all your ISAs in a single tax year. In the 2023/2024 tax year, this limit was £20,000, and you can’t go beyond this. While this may seem high, you could easily reach this limit if you’re a committed saver with a good income.
It’s also important to know that easy access to your savings doesn’t mean instant access. Our easy access cash ISA lets you access your money within one business day.
Opening an easy access cash ISA with us is simple. Most banks, (us included) allow you to open one online. You’ll need to provide some personal information, such as your National Insurance number and proof of identity. And then it is usually only a matter of days before you’re set to start your ISA savings.
To wrap up, easy access cash ISAs are a versatile, flexible, and tax-efficient way to manage your savings. They’re as perfect for the careful planner as for the more spontaneous spender. Whether you’re saving for a specific goal or just want a secure place for your money to grow, these accounts offer up some great features to help you meet your savings goals. So, why not give an easy access cash ISA a whirl? Your future self might thank you!