What is the Cash ISA and how does it work?

A Cash ISA is a type of Individual Savings Account (ISA), into which you can deposit money and earn tax free interest on your savings.

The Moneybox Cash ISA can be opened with a minimum first deposit of £500, or by transferring in an existing ISA, and currently offers an interest rate of up to 5% AER (variable).

New Cash ISA customers will earn 5% AER (variable) on balances of £500 or more, which includes a bonus rate of 0.55% for the first 12 months. A lower interest rate of 0.75% AER (variable) applies whenever your account balance is less than £500, and you’ll temporarily lose the bonus rate until your balance increases to £500 or more.

There’s no limit to the number of withdrawals you can make, but if you withdraw four or more times within each 12-month period from the date of opening your Cash ISA, you’ll receive the lower rate for the rest of that period and lose the bonus rate if this is within your first 12 months. The number of withdrawals you can make without impacting your rate will reset yearly on the date you opened your Cash ISA.

You can pay up to £20,000 each tax year into an ISA, however this limit is shared between any other ISAs you hold.