Money Basics: 1 in 5 Aren’t Aware of S&S ISAs, Are We Saving Wrong in 2025?

A recent study¹ has revealed that only 21% of men and 11% of women in the UK are using Stocks & Shares ISAs, while nearly 1 in 5 people aren’t aware of their existence. But with rising interest rates, should we be re-thinking where we are putting our money?

Damien Jordan, founder of Financial Interest and Damien Talks Money, has provided his knowledge on whether he thinks Cash ISAs are still worth it, which type of ISA is the best in 2025, and which ISAs are most logical for savers and investors.

Are ISAs still worth it? Damien weighs in: “Absolutely, ISAs remain one of the most worthwhile and tax-efficient ways to save and invest money in the UK, whether it’s a Cash ISA, a Stocks and Shares ISA, or a Lifetime ISA. Depending on whether you have short-term goals like saving for a car or long-term goals like saving for your first house, there is an ISA for you that will suit your individual needs and will protect you from income tax and capital gains tax.

“My advice is to always keep your own personal financial goals in mind when choosing an appropriate ISA, and be aware that ISA rules are subject to change”

Types of ISAs best for savers in 2025:

• Fixed Rate Cash ISAs – These ISAs are suitable for the less risky because their interest rate stays the same throughout the entire term of the ISA, so there is no need to worry about it declining. Savers putting their money in Fixed Rate Cash ISAs must also be comfortable with storing their money for a set period of time.

• Easy Access Cash ISAs – These types of ISAs are good for people who want flexibility and may plan on making withdrawals at any time. However, interest rates can change during the term of the ISA, usually in line with changes to the Bank of England’s base rate.

• Lifetime ISAs (LISA) – A LISA is perfect if you’re a saver under 40 and saving for either a first home or retirement. The government adds a 25% bonus to your contributions, which is unmatched by other savings accounts, and you still generate interest on top of this. However, there are penalties if you wish to withdraw the money for any reason other than buying your first home or retirement. You should also be aware that a LISA can only be used on house purchases worth £450,000 or less. This in particular has been an issue for home buyers in the South of England where property prices often exceed this limit.

Types of ISAs best for long term investments in 2025:

• Stocks & Shares ISAs – This ISA is good if you’re looking for long-term growth, as it offers the potential for significantly higher returns over the long term, though investing always has risk. This is one of the most tax-efficient ways to invest in the UK.

• Lifetime ISAs (LISA) – Personally, I would use a Cash LISA to save for a home as I’d want to take advantage of the 25% top up (up to £1,000) from the government, but I wouldn’t want to risk a short-term drop in the stock market affecting my ability to buy a home when I planned. For retirement, because the time scales are much longer, I would suggest a Stocks & Shares LISA in order to maximise potential growth.

Which type of ISA makes the most sense for savers and investors today?

Damien said: “Choosing an ISA that makes the most sense to you relies on your own circumstances, as well as your willingness and ability to take risks.

“If your goal is to save for something short-term then a Cash ISA makes it a great option as it offers both security and accessibility. Whilst Cash ISAs are a good way of saving for immediate needs, investing through Stocks & Shares ISAs has a higher potential of stronger returns which could help savers not only grow their wealth but also protect them against inflation. This is why the government is currently looking at reforming the UK ISA system to encourage more people to invest rather than save, but investing comes with the risk of potentially losing money and a very long-term approach is needed. Lifetime ISAs are great for those who are under 40 and may be saving for either their first home or investing in their future retirement thanks to the 25% government bonus which you won’t receive from a regular savings account.

“The key takeaway here is to make sure your money is working for you, not sitting around in a low-interest savings account. Banks don’t do a good enough job of rewarding loyalty so if you haven’t looked at your options in a while, it’s likely you’re getting an interest rate that isn’t competitive.”