Cash ISAs may be in the form of Bank and Building Society accounts, units in authorised unit trust money market funds (i.e. 'cash funds') and authorised unit trusts which invest in other cash funds (i.e. 'fund of funds'). There are also National Savings Bank products specially designed for ISAs. However you can only invest in one Cash ISA each tax year and a Cash ISA has a maximum annual investment of £3,000.
CAT standards for Cash ISAs require providers to:
- stipulate a minimum interest rate no lower than 2% below base rates
- set minimum investments of no more than £10 per month
- allow for withdrawal within 7 days and
- show investors all the terms and conditions on purchase
Point to Watch: If you invest in a Cash ISA you will not be able to invest in a Maxi ISA in the same tax year.
