13:31 04 March 2013
Sorting out financial information is not everyone’s cup of tea, but in order to have a stable future it is imperative to learn what you can about the variety of savings options. The good news is that you don’t need to choose just one option; you may be able to choose multiple savings options to try and maximize your return.
When it comes to savings here is what you should know about ISAs vs. savings accounts:
•The main difference between ISAs vs. savings accounts is that the earned interest is income-tax free on ISAs. Otherwise, the accounts work similarly to a regular savings account. Check with your financial institution for any special details or policies they may have on their accounts.
•ISAs and savings accounts both use post-tax money for deposits into the accounts.
•ISAs have annual limits which must be adhered to.
•Savings accounts have no limit on how much money you can deposit for saving.
•Depending on your financial institution, you may be required to avoid withdrawals from a regular savings account, and you may also be required to invest in the savings on a monthly basis.
These are the most important differences to note regarding the accounts. You will typically receive a higher rate of return with an ISA due to the tax-free interest, but if you’re looking to really establish a serious savings cushion, you’ll also want to have a regular savings providing all the criteria for deposits and withdrawals can be met.
If you take advantage of both rather than trying to choose between ISAs vs. savings, you’ll give yourself the benefit of multiple options and you’ll be taking advantage of the best of both worlds for the greatest return.
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