What is a Cash ISA?
A Cash ISA is a savings account that enables you to earn tax-free interest on your savings. Anything you save into a Cash ISA will count towards your annual £20,000 ISA allowance – which is shared with other ISAs you might have (including a Stocks & Shares ISA or a Lifetime ISA).
Please note, tax treatment depends on individual circumstances and is subject to change.
Learn about the differences between a Cash ISA and a Lifetime ISA
There are different types of Cash ISA out there – including ‘fixed-rate’ and ‘variable rate’ (sometimes also called ‘easy access’). Fixed-rate means that you’ll have to lock your money behind a notice period to earn a higher interest rate, while easy access means your money will be with you quickly if you need it – usually at the expense of slightly lower interest when it comes to fixed-rate accounts.
Learn more about the different types of Cash ISA and which might be best for you
Advantages of a Cash ISA
Here are some of the main benefits of a Cash ISA.
Accessibility: if you choose an easy access Cash ISA, you’ll often have access to your money the next working day if you make a withdrawal.
Low risk: Cash ISAs are a low-risk way to build your wealth because your money is held as cash and it earns interest.
Tax benefits: Cash ISAs let you earn tax-free interest.
Learn more about the advantages of Cash ISAs vs regular savings accounts
What is a Stocks & Shares ISA
A Stocks & Shares ISA is an investment account that enables you to invest your money into the stock market. Any money you invest with a Stocks & Shares ISA will count towards your £20,000 annual ISA allowance, and you won’t pay any tax on your investment gains.
When compared to a Cash ISA, a Stocks & Shares ISA comes with a higher risk of losing money – but also the potential for higher returns.
Learn more about investing with a Stocks & Shares ISA
Advantages of a Stocks & Shares ISA
Here are some of the main advantages of investing with a Stocks & Shares ISA.
Potentially higher returns: as an investment account, Stocks & Shares ISAs have the potential for higher returns compared to savings accounts like Cash ISAs.
Spread your risk: while investing is riskier than saving your money as cash, you can invest your money across different asset types and stock market sectors.
Tax benefits: Stocks & Shares ISAs are great for building your wealth over the long term because any investment growth you experience won’t be hit by tax.
Should you open a Cash ISA or a Stocks & Shares ISA?
As a first stop, you should assess your risk tolerance and time horizon.
Moneybox has two great rate Cash ISAs: Cash ISA or Open Access Cash ISA.
You can only have one Moneybox Cash ISA account open at this time.
If you’re comfortable accepting more risk, consider a Stocks & Shares ISA. You can customise your portfolio to bring in funds and individual US stocks.
That said, there’s no reason why you can’t have both a Cash ISA and a Stocks & Shares ISA.
Read our FAQ on Stocks & Shares vs Cash ISA
Interest rate subject to conditions. A lower rate of 0.75% AER (variable) applies if certain account conditions aren’t met.
Interest is accrued daily and is paid on the first day of each month.
Tax treatment depends on individual circumstances and may be subject to change in the future.
You can see how much interest you’ve accrued by logging in and going to Wealth > Cash ISA > Breakdown.
Capital at risk. All investing should be long term. The value of your investments can go up and down, and you may get back less than you invest.
Updated: 19 November 2024