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> ISA Savings Account - UK Guide
 In a nutshell
An ISA (Individual Savings Account) is a savings account that is designed for tax free savings
Best Saving Account For
At the moment every adult in the UK has an ISA allocation so has the potential to benefit from the tax free status they offer. Even non tax payers may benefit from this kind of account as they often attract higher interest rates.
Expected Return
Your returns from an ISA savings account will depend on the provider and the product you choose. If you're taking out a cash ISA then you will earn interest that is untaxed so your returns will automatically be higher than those given by most standard savings accounts. If you opt for investment based accounts then your returns will be linked to market performance - so you could see exceptional returns or you could lose out on your investment.
Access
You can generally have instant access with most cash-based ISA accounts, although some may ask you to commit to notice periods. You may find that share based ISAs have different terms and conditions as investment based accounts are viewed as having longer term returns - and, if you do withdraw, you may lose out on your original investment.
How often interest is paid
Many ISA accounts will pay annual interest although some will pay monthly.
Advantages
ISA savings accounts are currently free from income tax and capital gains tax - so any tax payer will save money by using one. Many ISA providers also offer the additional guarantee of a CAT (Charges, Access and Term) standard which means that you will know exactly where you stand regarding fees, accessibility and the way that your account is managed. With a cash ISA even non tax payers may see some benefits - these accounts frequently offer some of the most competitive interest rates in the savings sector. So, you can make your savings work harder for you. The investment elements of an ISA product make it easier for the average consumer to invest in the stock market even if they don't really know much about it. Many investment ISAs are bundled up ready-made for you and you can invest up to £7,000 (under current rulings) in a mix of cash, investment and life insurance accounts so you can spread your risk at the same time.
What to look out for
There are limits as to the sums you can invest in ISA accounts. And, it can be quite confusing to work out what kinds of accounts you can open each tax year. At the moment you can take out a 'maxi' ISA which allows you to save £7,000 in investment accounts or a split of £3,000 in a cash account, £3,000 in an investment account ands £1,000 in an insurance account. Or you can open 'mini' ISAs where you can just invest the same individual sums in one of the accounts. You can't open a 'mini' and a 'maxi' account in the same tax year. You also can't keep adding to your ISA account if you withdraw from it - if you have a £3,000 limit per year then that is the most you can save for that year - no matter how much you take out of the account. If you're only looking at a savings account then your limit of £3,000 may be tax free but it does limit the actual tax savings you'll make on any cash you have to spare. You also need to look out for charges and special offer interest rates for ISA savings products. The market is full of special introductory offers that may quickly change into something else - i.e. lower interest rates or higher charges. And, if you're investing rather than saving you need to be aware that you are gambling on stock market performance so you have no guarantee that your capital will be safe. It's also important to read the terms and conditions of an ISA savings account before you open one. It can be quite useful, especially with cash-based accounts, to change providers to follow the best rates. Some accounts, however, will levy penalties if you want to do this.
Alternatives
An ISA savings account is currently the best option of its type for easy tax-free savings/investment for the majority of consumers.
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