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Cash ISAs and savings

Cash – a deposit made into a bank account – is a really important part of any investment portfolio. No matter what your goals are, it’s essential to have some cash tucked away for a rainy day or emergency. If you don’t, you may be forced to sell investments at a loss.

Doing more with your cash

If you think cash is risk-free, think again. You'll get your money back but high inflation and low interest rates can soon eat into its buying power. For that reason, most investors try to make sure their cash earns as high a return as possible by using some of the products below.

Savings accounts

If you keep your money in a current account, chances are it’s not gaining much – if any – interest at all. Transfer it over to a savings account and you’ll be able to earn a small amount of interest without tying up your money. You will receive a better return on your money, but you may not have the same flexibility to withdraw it.

Cash Individual Savings Account (ISAs)

A cash ISA is a savings account that allows you to save your money and earn interest, free of UK Income Tax. The rules relating to cash ISAs are changing. Until 1 July, you can save up to £5,940 of your total £11,880 annual ISA allowance in a cash ISA. From 1 July, the ISA allowance increases to £15,000 and can be used in full in either a cash ISA or an investment ISA or split between the two.

If you choose to, you can invest the balance of your annual ISA allowance in an investment ISA. Please bear in mind that the value of an ISA’s tax benefits will depend on your individual circumstances and that tax rules can change 2.

If you already have enough cash savings tucked away to cover any emergencies, you might choose to invest the full allowance in an investment ISA. However, this type of ISA comes with the risk that you could get back less than you paid in.

If you decide a cash ISA is for you, there are lots of different types available. Some are completely flexible and let you take out your money at any time. Others offer higher rates of interest if you commit to saving for a set period. As with all investments, it’s worth doing your research before making your decision.

Term deposits

These usually offer a higher rate of interest than standard cash savings accounts. However, you have to agree to leave your money in for a fixed period of time. And if you are allowed to withdraw your money early, you might have to pay a penalty.

Money market funds

These are not cash investments or savings accounts. They carry the risk of you losing your money. Basically, these funds aim to earn you a better return than bank interest rates. They do this by holding a mix of investments – eg, some deposits and short-term securities that earn interest but can fall in value. They can earn you a better rate than cash savings accounts but returns are not guaranteed and you could get back less than you invest. You might be required to defer withdrawals.

You can’t currently hold money market funds in an investment ISA. However, they can be held in a MarketMaster®, Barclays Stockbrokers' general investment account.

When ISA rules change on 1 July, you will be able to hold money market funds in an investment ISA.

How to choose cash investments

A secret to good cash management is knowing how long you can commit to saving for. In general, the longer you are willing to keep your money in one place, the higher your potential returns.

We offer a wide choice of cash investments, including savings accounts and cash ISAs. The right one for you will depend on your investment goals.

 
 

Important information

1. Calls to 0808 numbers are free if made from a UK landline. Call costs to 0141 numbers may vary – please check with your telecoms provider. Our opening hours are 8am-6.30pm, Monday to Thursday, 8am-6pm on Friday (excluding bank holidays) and 9.30am-12.30pm on Saturday. To maintain a quality service, we may monitor and record phone calls. Call charges

2. Tax rules can change and the benefits and drawbacks of particular tax treatment will vary with individual circumstances. We aren't a legal or tax adviser and aren't providing you with legal or tax advice. If you have any queries as to the legal or tax implications of any investment, you should seek independent professional advice.

Barclays Bank PLC. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number: 122702). Barclays Bank PLC subscribes to the Lending Code which is monitored and enforced by the Lending Standards Board. Further details can be found at www.lendingstandardsboard.org.uk. Barclays Insurance Services Company Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register number: 312078).

Barclays Bank PLC. Registered in England. Registered no. 1026167. Barclays Insurance Services Company Limited. Registered in England. Registered no. 973765. Registered office for both: 1 Churchill Place, London E14 5HP. ‘The Woolwich’ and ‘Woolwich’ are trademarks and trading names of Barclays Bank PLC. Barclays Business is a trading name of Barclays Bank PLC.


 

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