Cash ISAs A Cash ISA is a type of account that’s usually offered by banks and building societies. Your provider pays interest on the amount you save, rather than investing it into assets like stocks and funds. Any interest you receive or withdrawals you make are tax-free.

A cash ISA is a great way to build up a buffer in case of emergency. The rule of thumb for the amount of cash you’ll need to set aside is between three and six months’ expenditure to cover all essential outgoings.

Pros: Interest is added each month and is tax free. You can withdraw money at any time, and this is tax free too. Your money is protected and doesn't go down.

Cons: Interest rates can vary, and may not keep up with inflation, and Cash ISAs give lower long-term growth compared to investing in a Stocks and Shares ISA.

The general rule is that any money you’re likely to need in the next five years should be kept in a Cash ISA. But if you won’t need to get your hands on it for longer than that, you could look at investing it in a Stocks and Shares ISA.

Use the button on the left to find a Cash ISA that works for you.

Stocks and Shares ISAs

A Stocks and Shares or investment ISA allows you to invest your savings for the longer-term. You can vary how much risk you take, depending on what you invest in, and this can also have an impact on your returns.

If you are looking to save for more than five years, the average return is likely to be much higher in a Stocks and Shares ISA than a Cash ISA. The downside is that returns aren’t guaranteed and if your investments fall in value, you’ll end up with less money than the amount you paid in. It means that you’re taking more risk with your money, but the longer you invest, the more likely you are to see positive returns.

Pros: You have potential for higher returns , which could beat inflation over the long term. Any gain you make on investing is tax-free.

Cons: The value can go down as well as up, so it's not suitable for short-term needs or emergency funds. If you're not comfortable picking your own investments, there are usually ready made packages you can choose from, but you might want to take advice to manage investments, and keep an eye on your investments.

Your bank might offer their own Stocks and Shares ISA, which could be a easy way to set one up. You can also use the button on the left to find one.