Why saving for a rainy day matters in January

As 2012 ends and a New Year starts, all the people have their new financial resolutions for 2013, to manage their wealth better. With all the burdens in life, it is very essential to know the ways to manage your money wealth for this brand New Year, to make the most of your savings. So this January is the best time to save for a rainy day or retirement. Opening a savings account is a good choice to help you save your money and manage your finances well. But will all the savings accounts that work well, the most effective are cash ISA. Investing in an ISA will give you good returns on your money and they are usually tax free.

A cash Individual Saving Account (ISA) is simply a normal savings account where you can access money like any other savings bank account. The only difference exists is that you can deposit money in the ISA and it stays tax free year after year. In general the taxpayers often provide 20% - 40% of their savings interest rates depending on the taxpayers, to the taxman. But in an ISA you save all those money to give you a better money management for your future welfare. This implies that the basic taxpayers earn a quarter more interest at the same rate in a cash ISA, while the higher taxpayers two – thirds more. Thus every adult can save their allowance once in each tax year in April. For the present financial year 2012 – 2013, the annual ISA allowance is £11,280 but only £5,640 of that may be used for a cash ISA. From April 6 2013, this amount is expected to rise to £11,520, of which £5,760 can be put in a cash ISA. So you can always choose a UK cash ISA as an investment to save a lot for a rainy day.

The top advantages of a cash Individual Saving Account (ISA):
  • You can withdraw your money any time just like a normal savings account.
  • You get a whole new cash ISA allowance at the end of every financial year in April.
  • You can hold more than a single ISA from different years with different providers.
  • You can transfer cash ISAs to new better buys from the past years in order to increase the rate.
  • Your savings are safe in a UK regulated bank, as it is protected under the Financial Services Compensation Scheme (FSCS).
Higher rate of interest is better, but you need to have a periodically check on the rates. Many providers advertise the best short term rates to new savers. But once you save the money they can change their rates whenever they decide to. So it is advisable to have a regular check on the best rates the provider still provides, or else you can transfer it to another provider. You should also know about the facility to access your money. Some provider accounts have restriction on their withdrawals or also have penalties. If you require withdrawing money, you should pick the ISA which allows you to do so.
If you want to put money and forget for a tax year, you can always choose the top Fixed Rate Cash ISAs.

Fixed rate ISAs provide a guaranteed rate for a set time period, but you will encounter severe penalties if you attempt to withdraw money during this time. They certainly offer over the rate of the top instant access ISAs. You can search locally for savings accounts from reputable banks to get the best possible rates.

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