Interest rates: ISA deadline looms but Britons urged to act before bank holiday arrives | Personal Finance | Finance
Interest rates have been impacted by the Bank of England’s base rate decision with rates currently set at 0.1 percent. With the impact of this decision continuing to be felt by savers, many are looking at the options which could present themselves to help money grow. Traditionally, ISAs have been a suitable option for savers to grow their funds tax-free.
Ms Mann continued: “The bank holiday definitely has an impact on potentially the way you are paying in to that ISA in terms of whether or not the payment will be received in the current tax year.
“The Friday and the Monday are both bank holidays, and for example, if you have a Direct Debit, that will need to have left the bank earlier than on the day.
“Debit card payments and open banking payments – if your provider offers them – can be up until the deadline of 23:59. This is because the payment is time stamped.
“Although I’d definitely advise against submitting a payment at 23:59 because then you have all the last-minute added stress of payments.”
ISAs, or Individual Savings Accounts as they are formally known, come in various different forms which can suit a person’s financial needs.
While cash ISAs are probably the most familiar, returns on all instant access accounts have been weak recently.
As a result, individuals may wish to engage with ISA saving in a different way, perhaps taking more risk than they are used to.
Ms Mann touched upon this option, stating: “Another thing to bear in mind this year is around whether you are considering a cash option or an investment option.
“It’s important to remember you can contribute to both, having a cash ISA and a stocks and shares ISA open at the same time in the same year.
“If you’re thinking about different goals, and there’s a pot of money you think you’ll need in less than three years – then cash is the option which might be better for you.”
With stocks and shares ISAs providing Britons with a taste of investment, there may be other opportunities which may present themselves throughout the next tax year.
With interest rates appearing to be set to remain low, some may decide investment is the right action they should take with their finances.
It is worth bearing in mind, however, that investment comes with risk, meaning the value of a person’s investments could go up or down.
Ms Mann concluded: “It could be worth trying out investing, looking at your options and gaining further understanding and information. Have an idea of what you want that pot of money to be for – what is ultimately your goal?
“Are you thinking about a new house in five years time? Do you want to travel the world when things open back up? Having a good idea of what your pot of money is for helps to keep your time frame in mind.
“We know people who have very specific goals don’t get as worried with investing and tend to ride out short term market volatility.
“If you’re looking at dipping your toe in the water, some providers offer a 100 percent cash option which allows you to drip feed money into an investment.
“Each month you can move a certain amount into a profile of your choice, and helps you spread risk over time.”