Five Things to Consider When Comparing ISAs vs. Savings

Learn the benefits of each,as well as limitations,and decide which is best for you.

13:19 03 March 2013

It can be confusing trying to decide between establishing an ISA vs. Savings. The two can be extremely similar depending on the financial institution that handles your finances. This is a good time to do a little shopping around though.

 

Here are a few benefits of each of these types of accounts, though the list is not comprehensive by any means: 

 

ISAs:

 

•Typically you benefit from a higher rate than a regular savings account (some refer to the regular savings accounts as “unwrapped” savings). 

 

•Cash is usually available immediately in the event of an emergency. 

 

•There is cap on the amount which can be invested annually in an ISA. Check with an IFA or the bank to find out the current amount in the event of recent government changes.

 

•Two types of ISAs: cash ISAs and stocks and shares ISAs. The cash ISA earns a small return on your investment but you are guaranteed that you will get back the amount you invested at the very least.

 

Stocks and shares ISAs involve investment procedures that rely on the fluctuations of market trends and have the ability for significantly more earnings in less time, but can also end with less money that was initially invested if the market suffers heavy losses. 

 

Onward with the comparison of ISAs vs. Savings, savings: 

 

•Seemingly lower rate, but which may be calculated differently to end up with more interest. 

 

•Certain conditions may penalize you for withdrawals by yielding a lower interest payment.

 

•No cap on investments.

 

•Scheduled deposits for some banks.

 

There are benefits to each so in the case of ISA vs. Savings it is completely up to the best fit for your needs. Choose one, or both.