- Find the right Cash ISAs
- Cash ISAs or not?
- Corporate bonds vs Cash ISAs
- ISA brochures

At first glance there might seem little point in putting money into a cash ISA. With a base rate of 1% (that is likely to fall further), the tax saving will be so minimal. However, as Arthur Childs, an IFA with Surrey-based Arch Financial Planning explains, if you are going to hold money on deposit anyway you might as well put the maximum into Cash ISAs preparing for the time when interest rates will pick up again.

"Cash ISAs have the advantage that they do not need reporting on a tax return and, for the over 65s, the interest does not count towards age allowance. There is also an argument that now that investors can switch into Stocks & Shares ISAs there is every reason to get money into Cash ISAs awaiting better economic conditions for equities." Martin Bamford, IFA with Cranleigh-based Informed Choice also takes a positive line on cash ISAs.

"For those who do not feel comfortable with the additional risks associated with investing their ISA allowance, cash remains the best option. Even with the currently low interest rates, cash provides a level of capital security which is simply not available from funds within the stocks and shares ISA wrapper. It is far better to utilise your cash ISA annual allowance and receive gross interest than leave cash in a bank account where interest is subject to tax. Using your ISA allowance now puts you in a stronger position when interest rates start to improve in the future.

Bamford echoes Childs' point that cash ISAs effectively allow investors to sit in cash for a while as they way up whether to move back into stocks and shares. However he points out that unfortunately under ISA rules investors cannot switch tax efficiently the other way from equities into cash. This rule has come in for heavy criticism but, be warned, it still stands.

Investors should always shop around for their Cash ISA but Childs warns them to be realistic about their expectations. “For people reliant on the income from their deposit accounts life is going to be very hard for the next year or two. With the Bank Base Rate now at 1%, some rates on offer from banks and building societies are defying gravity and can be expected to fall over the next few months ".

With this in mind, Neil Mumford, IFA with Cobham-based Milestone Finiancial Planning, suggests it might be prudent to consider a one year fixed rate ISA. He picks out ICICI Bank’s 3.90% as the best one year fixed rate followed closely by First Save at 3.60%, both requiring a minimum £1,000 investment.

For those looking to invest lesser amounts or via regular savings, Saffron Building Society is offering 3.3% with interest paid annually and the best from the big high street banks comes from NatWest with its e-ISA paying a respectable 3.25% with interest paid monthly.

Mumford, believes a fixed rate Cash ISA could be a good tactical move for investors anticipating better rates of return from next year onwards.

"It is true that with interest rates at their lowest for over 50 years the rates available on deposit do not inspire investors to save but with Governments globally uniting to fight the credit crunch with numerous stimulus packages, it is likely that inflation will re-appear in 2010 and with that a likely rise in interest rates to control it could not be ruled out."

Cash ISA investors could opt for a fixed rate product now whilst rates appear to remain on a downward route and switch to a variable rate when the trend on base rates is upwards again.

Whatever option you choose it should always be remembered that a cash ISA is tax efficient and will keep your money safe – which is in today’s economic climate is not such a bad thing!