The word ‘ISA’ is short for Individual Savings Account, and Singaporeans and non-residents can open these types of accounts. This trading account has benefits if you want to save money in an investment that earns interest at a competitive rate different from that offered by banks or other financial institutions. The best part about them is the tax breaks offered.
Rules regarding the use of ISAs
They do not cover day-to-day banking transactions such as ATM withdrawals. Still, they do allow you to invest your savings via a cash ISA, stocks and shares ISA, or innovative finance ISA, which contains peer-to-peer lending, among others.
It would be best to consider that all non-residents of Singapore are not eligible to open an ISA; only residents of Singapore or work pass holders, employment visa or dependent’s pass.
Savings accounts are less flexible.
On the other hand, savings accounts tend to be less flexible than ISAs because they usually pay lower interest rates and don’t allow many investing opportunities. However, they tend to be simple accounts that allow for a quick withdrawal of money and provide overdraft protection if necessary.
Savings loses value over time.
Even though savings accounts are easy to use, it is essential to note that your money can lose its value over time unless it stays invested due to inflation. On the other hand, however, if you were looking for an account to store large amounts of money without placing investments on it, the savings account would be the best option.
Flexibility in ISAs
Flexibility is one thing that makes an ISA so valuable; you can invest your money in numerous ways while enjoying tax benefits. Think of which type of account suits your needs more carefully before deciding, and always do your research before opening up any new accounts. Remember, while some banks offer accounts catering to both residents and non-residents, not all institutions will hold accounts open for foreigners, so it may be better to stick with Singaporean banks when dealing with financial institutions in this country.
ISA tax benefits
There are many differences between ISAs and savings accounts. Still, one of the most important is that ISAs offer you the chance to invest your money with tax benefits while savings accounts do not allow for any investments. They do, however, provide better interest rates than most other types of accounts. It is up to you which type of account is more suitable for your needs, so take time to think about it before opening an account. Furthermore, some banks may be willing to open both types of accounts. In contrast, others will only hold them open for Singaporeans or people with work passes etc., so choose wisely depending on your situation.
Are you looking for an easy-to-use account?
On the other hand, looking for an easy-to-use account to save significant amounts of money would be very difficult to take out in cash. Then a savings account might be more suitable because it protects you from inflation and allows for inflation quick access to your funds.
Need help deciding whether or not to open up an ISA or savings account? Then contact the bank directly; they often have advisors that can walk you through all the benefits of both accounts to make a better choice knowing all the facts. Whatever type of account suits your needs best, remember to always do your research before opening any new accounts to know what you are getting yourself into.
Bottom line
The differences between an ISA and a savings account are that, while they both have several significant differences, an ISA allows more flexibility in investing. In contrast, a savings account does not offer that same luxury but can provide better interest rates since it’s a more straightforward account. Also, some banks may only hold accounts open for Singaporeans or foreigners with work passes etc., so keep these types of restrictions in mind when opening a new savings plan. It depends on your own needs; take the time to think through what you want from a bank before making any decision at all.
Robbie Agar