During periods of economic downturn, finding a secure investment can prove very helpful because of the instability of the economic climate. The current economic situation is highlighted by the UK's GDP decreasing by 0.4% and its inflation rate dropping by 1.4% in 2009. The uncertainty of the economic climate also means people are investing less because they fear the placement may be insecure. However, some financial products such as Cash ISAs provide the customer with a stable investment.
The British Government introduced cash ISAs in 1999. They were brought in to replace the old Personal Equity Plans (PEPs) and the Tax Exempt Special Savings Accounts (TESSAs). Unlike PEPs and TESSAs which predominantly used by the middle classes, cash ISA accounts were introduced in order to offer a broader range of the population the possibility of opening a saving's account without having to pay tax on the interest the account generates.
Cash ISAs solely relly on the money the customer chooses to invest into the account. The minimum amount that the customer can invest being £1.00 and the maximum being £3,600.
Furthermore, it is also possible for one customer to have several of these saving accounts and to transfer revenue between these accounts. However, customers are only aloud to open one cash ISA account during the fiscal year (from April to April).
Cash ISA accounts are also very flexible in that the customer can transfer up 25% of the money that was initially invested into the account without notice or loss of interest before the account reaches maturity. If however the 25% limit on transfers out of the account is exceeded, the saver will be subject to a 90-day loss of interest. However, as it is the case with any other saving account, the money invested in an ISA account can also be withdrawn when the account reaches maturity.
The interest rates on these types of saving accounts are fixed which means the revenue they generate is stable and tax free as the type of account cash ISAs replace were also tax exempt. However, it is rumoured that after 5 April 2010 the interest generated by this type of savings may no longer be tax-free.
Cash ISA savings accounts can prove to be interesting investments, particularly in times of economic downturn, because they are tax-free and the interest rate remains stable until the account reaches maturity. What's more, that type of savings account is very flexible as the saver is able to transfer money out of the account at any time. This means the funds that are on the account are always available to the saver who also has the possibility to transfer the revenue generated by one ISA account to another.
See
All articles From Author
Tags:
Cash ISA
savings account
Word
Count Appx. :
450 |
Article Views 450
Published 16-11-2009
