Want to invest some money for a rainy day? Don't want to pay tax on your interest? A cash ISA is a good solution for saving money without losing interest to the tax man.

Every UK taxpayer is able to open a cash ISA. You can only open a single cash ISA in a financial year, and there is a limit to how much you can invest in a cash ISA. Don't forget that the limit is based on how much money you put in your cash ISA, so it's probably not a good account to have if you want to keep investing and withdrawing the money.

When to open an a cash ISA

Cash ISAs can be opened at a bank or building society all year round. However bear in mind that if you want a better interest rate then the new offers generally appear at the start of a new tax year (April).

Some attractive Cash ISA interest rates appear in the spring time, particularly if you have the full ISA limit to invest in one go. Alternatively monthly savings plans are normally available for most cash ISAs, so you can put some money away each month.

Internet only accounts tend to pay higher rates of interest. Foreign banks can also offer attractive cash ISA interest rates, but before investing with an overseas bank check that your ISA money is safe should the bank or country be unable to safeguard your money should either go bankrupt.

Another way to get a higher rate of return on your cash ISA money is to invest for a longer time period. If you don't need your money for a while then it's possible to get a higher interest rate if the account has a longer notice period, or if the ISA takes the form of a one year bond.

Sneaky bank cash ISA tricks

One problem with finding a cash ISA with a great rate of interest is that the interest rate will often stay attractive for a while, then as soon as you've forgotten about your investment the interest rate is slashed. Before you know it you're earning 0.1% or something on your nest egg!

It's always good to remain vigilant and check your interest rates on an annual basis.

It's easy to move existing ISAs between banks and building societies in order to get a better rate of interest. Be aware however that some banks or building societies may charge a fee for moving an ISA. Another nasty thing to watch for is the fact that what should be a simple transfer can sometimes take a long time due to administrative delays and errors. Yes we can put a man on a moon but it's seemingly impossible to move money between two institutions, even if they have branches next door to one another.

Finally, a new bank trick is to pay less interest on a cash ISA compared to their fixed rate bond or other non-ISA savings accounts. This is particularly irritating, and is an unwelcome development in UK banking.

Good luck with your cash ISA investments!