A cash ISA for the over 60s is a savings account that comes with extra tax benefits.

ISAs, which stands for Individual Savings Accounts, were introduced by the government more than 25 years ago to replace PEPs (personal equity plans) and TESSAs (tax-exempt special savings accounts). 

They are designed to encourage people to save more. 

To provide an incentive, the government says that all ISA income is completely tax free, including any returns. However, there is a limit to how much you can save into your ISA. The current limit is £20,000 each tax year.

There are four kinds of ISA available, but the two most common are cash ISAs, where you get paid interest on your savings, and stocks and shares ISAs,  where your money is invested.

With a cash ISA, you will earn interest on your savings, but you don't have to pay any tax on the money you make.

With a stocks and shares ISA, you make money through investment returns. These returns are also tax free.

A cash ISA for the over 60s works the same way as any standard savings account - with two exceptions:

• You can currently only pay in £20,000 per person each year - although you can usually transfer as much as you like from your old ISA provider to a new one

• All the money you make in interest is tax free

Just like with other savings accounts, you get different types of ISAs, depending on how long you are happy to lock your money away for and what kind of access you want. You can have fixed rate ISAs, easy access ISAs, notice accounts and more.

Cash ISAs are one of the most popular savings products in the UK with over 60s, and millions of people pay into them each year.

But they're not the only place to put your money, which is good news as you can only pay a limited amount into ISAs each year.

If rates rise, and you want to take advantage of this that year, you can open another product with a better rate, or transfer everything you’ve paid in that year to a new provider.

To help people looking to either get better returns or simply find somewhere else to save their cash, here are some of your options:

• Stocks and shares ISAs - these let you put money into shares and other investments without paying income tax or capital gains tax on growth. Returns could be far higher than with a cash ISA, but the value of your money could also fall if your investments perform poorly

• Standard savings accounts - You won't pay tax on the first £1,000 of interest you earn if you're a basic rate taxpayer, although this drops to £500 if you're a higher rate taxpayer. And if you’re an additional rate taxpayer you don’t get a savings allowance at all

• Fixed rate bonds - These are fixed rate savings accounts that allow you to invest a sum for a fixed period, for a guaranteed return. During the fixed period, you have no free access to your funds

Remember that only {{fscs-amount-money}} of savings is protected with each bank or building society. If you’ve built up more savings than that, you should think about splitting your money between several banking groups or building societies.

If you’ve got ISA money languishing in an old account that might not be paying the best interest rate, you need to think about how to maximise returns. Some accounts will let you transfer other ISA savings into them. This doesn’t count towards your limit for the year.

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