SAVERS looking for a big cash boost could get a free £1,000 a year through this little-known bank account.
Money is tight for everyone and households are looking at other ways to get make cash work harder.
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A lifetime ISAs (LISAs) is a savings account that lets you put away up to £4,000 every tax year.
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 but must make your first payment into one before the age of 40.
The big perk is that 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 another £1,000 free from the government.
What types of lifetime ISAs are there?
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 suitable if you are saving over a longer period for retirement.
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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.
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.
Cash ISA
A cash ISA 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.
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.
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