Recently, I was having a conversation with one of my British friends and we were talking about the poor economy and current recession that is going on in America. During the conversation, my friend mentioned ISAs and I found myself a little lost. So I asked him and he explained to me.

What is ISAs?

ISA stands for individual savings account. In 1999, United Kingdom’s Labor government wanted UK’s citizens to save money in case something happens in the future. So they decided to think of new ideas to urge people to invest. This is how ISA was originated. The government ignored the old savings programs such as TESSA and PEP and went ahead with ISA.

ISAs are tax-free savings accounts that let people to invest in stocks, shares, cash deposits and life insurance every year to a certain limit. By eliminating tax, UK’s government succeeded in convincing its citizens to invest more.

There are several different places to put your savings. In this article, we will talk about two really popular ones: ISAs and Premium Bonds. I have already told you what ISA is and how you can use it to invest.

Premium Bonds are lottery bonds available in United Kingdom. The way it works is that people buy bonds and the interest that is generated from those bonds is used for the lottery. Every month winners are picked by the machine ERNIE. Prizes even go all the way up to £1,000,000. NS&I is one of the largest corporations in UK that offers you premium bonds.

Also, remember that you can find different rates for ISAs at different places. Thus, it is extremely vital that you compare ISAs before getting an account. Compare the most famous ones first and then pick the one that suits your needs the most. This way, you will end up saving a lot of money which can be used for something else in future.