A cash ISA is basically a savings account that you don’t have to pay income tax on. You can save up to £3,000 every tax year and the interest you earn will be completely tax-free - but don’t be put off if you don’t have that much to spare, you can start saving from as little as £1.

It’s a safe place to put your money, as the investment is held in cash. This means that you’ll get back the money you saved as well as the interest you earn. And because it’s tax-free what you’ll get back is likely to be more than a standard savings account.

Pros

• We’re not talking big money, with cash ISAs you can often start by putting in as little as a £1.
• You won't pay income tax on the interest.
• Your money is safe.
• How and when you add money is up to you – you can make a one off lump sum payment, set up regular monthly payments or you can save as and when you have it.
• You have easy access to your money.
• You might get a higher rate of interest than in other bank or building society savings accounts.

Cons

• You can only save up to £3,000 each tax year.
• If you put in your limit and then take some out, you can’t put it back in within the same tax year.

Saving is for everyone and a cash ISA really allows you to make the most of your money – especially if you’re a taxpayer. It should be one of the first investment options you consider.

Remember though, once your deposit limit of £3,600 has been reached in a tax year, you can't put any more money into your cash ISA. This is true even if you've taken money out and left a balance of less than £3,600.

So, if you think you will make deposits exceeding a total of £3,600 in the same tax year, you will also need to think about another product.

Most, if not all banks and building societies offer cash ISAs, as do many other financial and non-financial companies. You can buy them yourself without any advice, either in the bank or building society, over the phone or online.

Know your limits – every tax year you can currently save up to £3,600 into a Cash ISA, and any interest you earn will be tax-free, so why not make sure you use this allowance?

Rate your provider – make sure you compare the interest rates of all providers to get the best deal.

Surf for your savings – internet accounts often give higher rates than on the high street.

Access rights? – know when and how you can get your money. Postal accounts may take longer.