Savings accounts (ISA)

[Potatoman]

Do people need to have a credit check to open an ISA? How do ISA's work? Thanks. PM

[STAH]

There are essentially two types of ISAs - stocks and shares, and cash.

The cash type carries no element of risk - you get back the amount you invested and gross interest. (Interest without income tax deducted). At the moment, the maximum investment is �3000 per tax year.

Stocks and shares ISAs do carry an element of risk and they can only be sold by certain authorised personnel. I believe that the maximum you can invest in the stocks and shares component is �4000 per tax year. I have a stocks and shares ISA that I pay into to boost my pension fund for when I retire.

Credit checks - You will have to check with the ISA provider as to what checks are undertaken. If you are a new customer then they will have to see some form of identification and address verification for yourself. This is to comply with regulations set by the Financial Services Authority. We do not credit score such accounts at my place of work as we are not assessing any risk. ISAs are a form of a deposit account which are ran only on a credit balance basis.

Hope that this helps you. Post another response if you need further clarification!

[stevie21]

Any ISA is a savings account/vehicle and should never involve a credit check as the provider is not giving credit. There's no overdraft, credit limit or loan etc. involved. There's no financial risk to the provider.

How do ISAs work? Which type?

[bronco]

This item will answer your question re the limits, but not sure about the credit check aspect.
http://www.is4profit.com/is4money/savings/guide_isas/ind ividualsavingsaccount10.htm

[Potatoman]

Thankyou all for your help. Iv been looking into savings for a while now, but dont have much to invest. Would a cash ISA be a good move? Do i just pay / transfer money into it like a normal account...? Do they lake long to set up? Just a case of going into the bank and come away with an account number? Do i get statements? I was just wondering about the credit check.

[stevie21]

Potatoman - yes to all of your questions (apart from taking long to set up). Any savings account is simpler to set up precisely because it doesn't require a credit search.
ISAs are tax free so whatever interest rate you see advertised is what you receive. Any other account will advertise rates which are subject to tax : if an internet account is offering 4% interest then you'll receive 80% of this figure unless you're exempt from this tax.