Martin Lewis’ tip boosted my income by £2,330 – all I did was make a simple call and you can do it too


A MARTIN Lewis fan has revealed how they boosted their income by thousands of pounds after making a simple call.

The money-saver named Sandra bagged the extra cash by ditching her old cash ISA for a new one which pockets her more interest.

A Martin Lewis fan has revealed how they boosted their income by switching their cash ISA

Sandra realised she could make more money after by switching her cash ISA account.

The reader said in the latest newsletter: “Another thank you from a very happy reader, as I switched my cash ISA from 1.75% to 4.35% with the same provider.

“I will benefit by £2,330 over two years, even after paying the penalty. Not bad for one phone call – thank you.”

ISAs (Individual Savings Accounts) are savings accounts where you never pay tax on any interest earned.

You can put up to £20,000 into one of the accounts every tax year.

But there are different types so it’s worth looking around to find the one that best suits your needs.

For example, cash ISAs can be opened by anyone 16 or over and you can deposit a maximum of £20,000 into one per tax year.

There are different types of cash ISAs, including easy-access cash ISAs and fixed-rate ISAs.

Easy-access ISAs let you add money in which can be taken out at any time without a charge.

Customers can get returns of up to 3.62 with Cynergy Bank’s easy-access cash isa.

Fixed-rate ISAs tend to offer higher interest rates than easy-access ISAs, but you will probably have to pay a fee for withdrawing money before the end of the term.

Those looking to lock their cash in can get 4.51% back by saving into Castle Trust Bank’s one-year fixed rate ISA.

If you’re willing to lock your cash away for longer, you could get 4.65% back with Close Brothers’ two-year fixed cash ISA.

Unlike regular savings accounts, cash kept in an ISA will continue to earn interest tax-free.

With a regular savings account, basic rate taxpayers have to pay tax on their savings if they earn more than £1,000 in interest annually.

Higher rate taxpayers have to pay tax on savings as soon as they earn more than £500 in interest annually.

This is what’s known as the personal savings allowance which was first introduced in 2016.

So if you lock your cash into an ISA you won’t need to pay tax on savings worth up to £20,000 each year.

However, cash ISAs aren’t for everyone and it’s worth assessing whether or not you’d be better off depositing your cash in a regular saver.

Cash ISAs aren’t right for everyone

Even though cash ISA rates are at the top of their game it’s still important to evaluate if they’re right for you.

Sarah Coles previously told HOAR: “A basic rate taxpayer with £30,000 of savings is better off with a top fixed rate ISA for a year than the equivalent savings account because while the rate is slightly lower, the tax saving makes up for it.”

So if you’re only planning on saving between £1,000 and £10,000 you’ll be better off with a normal savings account.

These accounts pay a smidgen more in interest right now and if you’re saving an amount that doesn’t take you over the personal savings allowance they’re a better option.

HOAR revealed earlier this month that savers looking to make the most of their deposits can now get up to 4.25% back with a boosted easy access savings account.

What are the other types of ISAs?

Customers also have the option of investing in stocks and share ISAs or taking out a Lifetime ISA if a cash ISA isn’t as attractive.

Stocks and Shares ISA

Stocks and Shares ISAs can be opened by anyone 18 or over and the maximum amount you can put into one is £20,000 per tax year.

Unlike cash ISAs which give you a fixed rate of return, stocks and shares ISAs can give you more or less back.

There is more risk involved in opening one of these types of ISAs as the money you deposit is invested in shares and bonds.

But, while the value of the ISA can plummet, it can also increase sharply.

Usually, you have to pay a number of fees with a Stock and Shares ISA too, so that’s another thing to bear in mind.

Lifetime ISA

Anyone between 18 and 39 can open a Lifetime ISA and deposit a maximum of £4,000 per tax year into one.

You can keep adding money into one up until you are 50 and must make your first payment into one before the age of 40.

Like with a Help to Buy ISA, you get a 25% bonus on top of any personal contributions.

So if you added £4,000 into one this tax year, you would get £1,000 free from the government.

There are two different types of Lifetime ISA – a Cash Lifetime ISA and a Stocks and Shares Lifetime ISA.

A Cash Lifetime ISA can be worthwhile if you are saving for your first home and are planning to buy within a couple of years.

A Stocks and Shares Lifetime ISA might be more worthwhile if you are saving for retirement.

With any Lifetime ISA, you will have to pay a fee if you want to use the money for anything other than your first home or retirement.

As an example, if you had savings worth £800, you would earn a 25% bonus of £200 on top – bringing your total pot to £1,000.

If you wanted to withdraw the entire pot early, you would have to pay a 25% early exit fee on the full amount – £250.

That means you would end up with £750, effectively losing £50 of your own money.