Is a cash ISA worth it?

Cash ISAs are a very common form of savings account in the UK. You don't pay any tax on the interest gained from a Cash ISA. However, you don't pay tax on the first £1,000 of interest from bank accounts anyway, so does this undermine the usefulness of Cash ISAs?

At the moment, interest rates are at a historic low, so the chances of exceeding the £1,000 interest threshold at which a cash ISA becomes advantageous becomes unlikely. With interest rates of 0.5%, you would need £200,000 in your ISA to achieve £1,000 of interest in a given year.

However, nobody knows what will happen to interest rates in the future. If you managed to accumulate £50,000 in your ISA, and interest rates were at 2% then you're in an good situation. Since ISAs are for life time savings, the likelihood of interest rates climbing sometime in the future seems likely.

Also, if you have money in a cash ISA, you have the option to move it to a stocks and shares ISA.