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Though Individual Savings Accounts (ISAs) have been around for more than a decade, many people are still not aware of all the benefits that such a savings tool can provide or the range of products that can be found under the ISA umbrella, which includes the Fixed Rate Cash ISA. In its most simple form the Fixed Rate Cash ISA is a cash savings account that guarantees you a level of return on your money for a set period of time. As your funds will be locked away for the duration of the agreement, the rate of return offered is usually higher than that of a standard Cash ISA, and when you compare it with a regular bank account, the yield can be considerably more. As a basic rate tax payer, you will find that the government will usually take 20% of all interest you receive on your savings. And if you are a higher rate tax payer then this proportion can increase to up to 50%, which means that of all the income you gain on your investments, the tax man is eligible for half. However, under ISA legislation, all income and growth achieved on investments within the ISA wrapper are completely free of tax, thereby significantly increasing the amount of return you enjoy on the investment you make. Under current guidelines for 2012-2013 you may invest up to £11,280 into ISA funds though only a maximum of £5,640 of this total can be held in a cash account. While some fixed rate ISAs will require a minimum deposit to gain the rate on offer, you are still only allowed to open one Cash ISA in any given tax year, whether this is a fixed rate product or an account that applies a variable rate of interest. When choosing the best individual savings account for you, use a comparison site which will not only specify the level of return that you can gain from your investment but will also detail the term during which your funds will be tied into the account. In addition, you will be able to gain information on any other conditions placed on your investment such as penalties applied for early closure and discover whether continuing deposits are permitted into the account or whether you are required to invest the entire fund in one lump sum. The information available should also advise you whether you can transfer in ISA accounts from previous years to maximise your level of investment return and whether withdrawals are allowed during the period of the agreement. While any such fixed investment is a gamble that the regular rate of interest will not rise, a Fixed Rate Cash ISA is an ideal savings account if you are looking to achieve a guaranteed rate of return from your money without risking your capital in more volatile equity type investments, and is only becoming more popular as it gets harder and harder to find a standard bank account that can offer a decent rate of return.
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