If you're concerned about losing your savings to tax or looking for a saving option that offers flexibility and ease of access to your funds without damaging your interest rate, Cash ISAs could be ideal for you. However, it's important to understand some of the crucial differences between types of Cash ISAs that can make certain options better suited to some people than others.

All returns on money invested in Cash ISAs are tax free, though some providers may charge annual fees for certain types of Cash ISAs, and these will also need to be taken into account when comparing products to find the most advantageous one for your situation.

Cash ISAs are the most common type of ISAs, which can be added to as desired up to a maximum value of £5,640, as part of your total £11,280 ISA allowance (2012/13 financial year). Stocks and shares ISAs are a more complex and involved option that are usually not recommended for first-time investors, as these require managing upwards of several funds. These investments can be chosen by the customer or with the help of an impartial financial adviser.

The interest rates for different Cash ISAs or similar Cash ISAs from different providers can vary dramatically though, making it important to do your research beforehand to ensure you're getting the best deal. This is especially important if you're planning on investing larger amounts. Some Cash ISAs offer rates as low as 0.1 per cent, while some offer more than 3 per cent AER.

When comparing Cash ISAs to other types of savings, you should be aware of the difference that tax makes. Because you will be earning the full value of interest on top of your savings, unlike the situation with bank savings accounts, you need to take this into account when making direct comparisons. For higher tax band customers, for example, a standard bank account may need to pay 7 per cent AER or more to be equivalent to a standard cash ISA.

Cash ISAs can be well suited to people looking for short-term savings or for a longer term option, since the interest you earn will increase each year, as will the totals that can be invested. If you're hoping to get the most out of your ISA, favouring longer terms such as three-year Cash ISAs can yield the greatest return on investment. However, longer term Cash ISAs will not always allow withdrawals to be made regularly, and doing so could significantly reduce the interest you earn.

The author of this article is a part of a digital marketing agency that works with brands like Northern Rock. The content contained in this article is for information purposes only and should not be used to make any financial decisions.