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An Individual Savings Account (ISA) is a safe, tax-free form of investment. As with any low-risk investment, the return you receive from an ISA can be minimal. However, there are ways to increase your ISA earnings to get the best ISA rates and still keep your money safe. Here are three strategies to consider:
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To earn your business, some banks offer high initial interest rates on their ISAs. Often these rates will only last one year, but you can take advantage of the competition between banks by switching ISAs on a yearly basis and thus repeatedly taking advantage of the best introductory rates.
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Other banks may offer small cash payments to entice you to open an ISA with them. Factoring these payments into your total return on investment for the year may yield a worthy percentage. Again, be prepared to move your money around from year to year.
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Some fixed rate ISAs offer far better interest rates for the duration of your money's stay, just beware that with some of these you may not be able to use your money for anywhere from 2 to 10 years. Penalties may be incurred for early withdrawals but they are probably the easiest way to secure the best ISA rates in the long term.
In these uncertain economic times, ISAs are certainly a good way to keep your money safe and still have it working for you. The fact that ISA interest payments are not taxed effectively makes them higher than those offered through taxable instruments and even equivalent gains on stock portfolios. Utilising the three tips contained in this article will ensure your ISA investments will earn you a respectable bit of extra income.
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