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BLOG: ISAs are for life, not just for ISA season

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
10/12/2014

At last, it’s finally here. The final day of the tax year and the last few hours to use your 2012/13 ISA allowance.

After weeks of enticing, coaxing, cajoling us to put our hard-earned savings into an ISA, all providers can do now is sit back and wait to see if they made enough noise/offered the best deals/came up with the most attractive perks.

That is until it all starts again tomorrow, because although it has been ISA overload over the past few weeks, ISAs aren’t just relevant in ISA season.

Of course it would be much easier to only have to think about ISAs once a year but by thinking about them more regularly you could end up with a significantly bigger savings’ pot.

By keeping an eye on ISA news throughout the year, you’ll be able to spot the best rates on the market and switch your money if necessary.

A number of building societies including Leeds, Cheshire, Coventry and Nationwide have already started to entice savers in early by announcing their new cash ISA rates and deals for the 2013/14 tax year.

In today’s low interest rate world, it has never been more important to get the best ISA rate possible; according to MoneySupermarket, ISA savers risk losing £500m this year by not switching to better deals once the bonus rates on their existing accounts expire.

Another incentive to keep ISAs on the brain throughout the year is the boost you can get to your savings by paying in monthly rather than sticking a lump sum in at the end of the tax year.

Besides the fact it is beyond many people to come up with the full allowance in one go – £11,520 for 2013/14 – you could actually make more money by paying monthly into your ISA.

According to TD Direct Investing, you could potentially earn £10,000 more over 20 years if you paid into your ISA monthly versus paying into their ISA annually, assuming there’s no increase in the ISA allowance and a 5% annual growth target.

This may seem like a remarkable number but, as with all long-term investing, it’s all about the impact of compound growth. In other words you make interest on the interest.

So, while you may be exhausted by all things ISA, it could be in you and your family’s best interests to think about these tax-free savings accounts more frequently than just once a year.