Mini cash ISA is Now Just Cash ISA

The government reclassified the "Mini" in April 2008 renaming it simply Cash ISA. A Cash ISA (Individual Savings Account) allows an investor to earn tax-free interest in a variety of different savings vehicles that include both variable and fixed-rate interest schemes.

How much can be saved?

Individuals born on or after 6 April 1960 are allowed to deposit from as little as £100 to a maximum amount of £3,600 with one provider for tax year. Presently, investors born on or before 5 April 1960,

can deposit up to £5,100 in a Cash ISA. After April 2 010, this higher amount of investment will be available to everyone looking to save in an ISA.

Different types available

There are different types of Cash ISAs offered and anyone looking to invest in one of these should be aware of one's available including:

Fixed Interest Rate - is a savings account where the owner receives a pre-stated fixed interest rate remains unchanged for the entire term. For example, if you were to invest £3,600 in a 5 percent fixed rate ISA at the beginning of the tax year, your would have a £3,750 balance at year's end which is your original deposit of £3,600 + £150 earned interest(non-taxable) resulting in a bank balance of £3,750.

* Terms, however, can change to make sure you know how long the term will be. You also need to check on any withdrawal limitations because there may be penalties to this can often offset any higher interest you would at accrued by the term.

* Discover if you have the ability to transfer funds to another ISA and the end of term in the event you find a higher interest rate.

Monthly Deposit Cash ISA

The maximum amount deposited in a Monthly Deposit Cash ISA is determined by dividing the annual amount of £3,600 by 12 for the result of £250. Making periodic deposits will have an effect upon total interest earned, for example, placing in a 10 percent interest bearing account would net an actual annual interest5 rate of 4.69 percent.

* Due to the fact that you deposit no more than £250 each month, which is 1/12 of your annual tax-free allowance, your actual annual interest rate will be reduced to 4.69 percent and your earnings wo0uld be less than if you had made your full allowance deposit at the beginning of the term in a Fixed Rate Cash ISA.

* Check for Notice Periods because some ISAs will grant instant access for withdrawal. Others set a no-withdraw requirement for the first year. Still others may require that you give a notice period before being able to withdraw any funds. Many ISAs that allow instant access also charge a penalty fee.

Since you have two goals for using an ISA - the first to acquire tax-free interest earnings - while the second is to establish a successful savings program, be prepared to make the maximum deposits without withdrawals. This would lay the foundation for an effective savings program.

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"Mini cash ISA is Now Just Cash ISA"

How much can be saved?

Different types available

Monthly Deposit Cash ISA