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Swiss Toni once said that a Mini Cash ISA is a bit like making love to a beautiful woman.

You need to have protection, is that what you mean?

Not quite. You see a Mini Cash ISA is a bit like making love to a beautiful woman because you have to keep on putting in money to get the most out of it; but you also have to keep an eye on what else is on offer, because something better could be round the corner.

Swiss Toni didn't actually say that, did he?

All right, maybe he didn't, but if he knew as much about PEPs and Tessas as he did smarmy one-liners, he would probably agree.

Fair point. Tell me more.

Well, there is a myriad of ISA's available, but the Mini Cash ISA is probably the easiest of the stable to understand. It's certainly a lot simpler to figure out than intricacies of the female mind, that's for sure. However, there are certain things you should bear in mind to get the Mini Cash ISA that best suits your needs.

You better tell me what these certain things are then.

Keeping some money aside is never a bad thing, but thanks to inflation wearing down the purchasing power of cash, it really does pay to find the best rate of return you can. If you can get that rate and not pay tax on it, then so much the better - and that's where a Mini Cash ISA comes in.

Does it swoop in like a Superhero, whisking away the damson in distress, and defeating the evil Dark Lord?

Not really, nor does it wear brightly coloured Lycra, but a Mini Cash ISA has become the new saving system to have. In the previous tax-exempt system, cash and equity investments were perfectly depicted by separate products: the Tax-exempt special savings scheme (thereafter known by its acronym, TESSA, and now defunct) took the cash and the personal equity plan (PEP) looked after the equities. With an ISA, both types of investment are sheltered under the ISA umbrella, but the cash component is available only to those investors who subscribe to the Mini Cash ISA.

LESS OF THE GOBBLEDYGOOK - HOW DO THEY ACTUALLY WORK?

The whole point of a Mini Cash ISA is that you entrust your money to the institution paying the best rates of interest. But there are differences between how the various businesses - be they banks, building societies, telephone or internet companies - structure their cash ISAs. So if you want maximum bang for the buck, it pays to know the little idiosyncrasies of how they all work.

What do I need to look for then, the highest interest rate surely?

The best Mini Cash ISA rates reveal an average tax-free rate higher than an average High Street deposit rate, from which the Chancellor will take 20 per cent of any interest earned.

He's a big greedy, that Chancellor bloke, isn't he?

Indeed. But on the surface, this makes the rate paid on Mini Cash ISAs look very good. But look first to see if any nasties lurk in the small print. What you are looking for here is the best interest rate possible at the time of opening the ISA, as well as an interest rate that remains good in future. The second bit is trickier because you don't know what your chosen financial institution will do with its rates.

So what's the best deal then?

It's difficult to say what the best product is - you can only say what is best at the current time.

Is that creosote on your trousers, Mr. Fence Sitter?

No, it's marmite, and I'm only trying to help! Online accounts tend to pay higher rates and you should be able to find an ISA that pays more than the current Bank of England Base Rate. If there is a guaranteed or bonus rate make sure you check how long that rate will continue for. Banks have a habit of attracting you with pretty rates in big newspaper adverts and then quietly cutting them by sending you a boring letter that you throw in the bin because you think it's a circular.

The sneaker beggars.

Not only that, but you also need to be wary of that headline-grabbing rate of interest. There are always strings attached. If you want no-notice, penalty-free access to your cash, you might not get it from the organisation offering the highest rate.

There's also a possibility that the highest rate - however penalty-free - will only be applicable to savers who deposit the whole £3,000 allowance as a lump sum.

And a high number of cash ISA rates include a 'loyalty' bonus - usually 0.5 per cent - that is paid only if no withdrawals are made during the first 12 months. If you have to take money out, the rate drops.

Some Building Societies only offer their top rate to existing members. And many building societies with a geographically concentrated branch network will only extend cash ISAs to people living within a certain catchment area.

So even if you turn up with three grand in used tenners, if you don't have the correct postcode you'll be sent packing.

What if I re-mortgage my house, plough in all my savings to make loads of money in interest?

Steady on there tiger, the Government isn't stupid you know - you won't be able to do that. They're there to be used as a nice little savings plan, and the limit for contributions to a Mini Cash ISA are capped at £3,000 per year. And if, for example, you withdraw £1,000 of that, you can't then put it back at a later date. Once you hit the £3,000 limit, that's that.

SO DO I ACTUALLY NEED AN ISA?

Maybe you do, maybe you don't. Before you sign up for a Mini Cash ISA, consider if you really need one. Do you want instant access to your money? Can you afford to deposit £3,000 at the start of the tax year, or will you be making deposits as and when you can afford it? What are you saving for - to grow your capital, or else just keep a reservoir of accessible cash in case of unforeseen emergencies?

Crikey, that's a good point.

Yep, and you should also be aware just £1 in a cash ISA immediately obliterates £3,000 of your equity allowance. So if you plan to invest more than £250 a month (£3,000 a year) in unit trusts or investment trusts, then a cash ISA will certainly cramp your style and is probably not for you.

But if you intend to invest less than £3,000 in equity-based investments and go down the mini-ISA route, then a cash mini-ISA is a useful option to keep open.

Consolidate to accumulate?

Now you're talking my language. These days it's not uncommon for people to have a number of savings accounts with different banks and building societies, some of which may have been opened as a purely speculative ploy in case the society de-mutualised and showered its savers with cash windfalls.

Give me another good reason to get one.

Okay then, one reason for starting up an ISA is that it makes sense to close down any mediocre accounts you have and consolidate your cash in one place that pays the best rate of interest. As the interest on cash mini-ISAs is calculated annually, it makes sense to invest either at the end of one tax year (to mop up any unused allowance) or at the very start of a new tax year.

That way, your money is earning the high rate of return for the longest period of time before the interest is calculated and then added.

Am I better off emptying my load at one go, or taking my time with small deposits?

Sounds like you're going back to the 'making love to a beautiful woman' lines. But to answer the question, if you drip feed money in, your return will be lumpy and you may not get the best rate all the time. And investing the full whack in October (the middle of the tax year) effectively halves your real rate of return. So if you have found a decent rate and have the three grand ready, bang it in.

WHAT DO I DO NOW?

Watch the rates for starters. Even once you open a Mini Cash ISA, you still should be vigilant. It's not unknown for financial institutions to tempt savers with market-busting rates and then, when the product has met its sales target, quietly drop the rate to one that is less than spectacular.

What if they do that to me?

If this happens to your Mini Cash ISA, check to see if any institution is offering a better rate. When you find the most attractive one for your needs, don't withdraw your money. Once it comes out of the ISA shelter, it can't be put back. Instead, fill in a transfer document so the money seamlessly ports from one ISA into another.

What happens if the rate goes pear shaped?

Should the interest rate fall, or fail to rise in line with others on the market, you can switch your Mini Cash ISA to a bank or building society that offers a better rate. All you do is tell the new bank that you want to switch your ISA to them and they will help you to arrange the transfer of your savings for you. On no account should you close your Mini Cash ISA, withdraw the money and try and put it into a new ISA. Some ISAs make a charge if you decide to move your funds. You may have to check the small print to find this. These accounts are definitely best avoided.

I knew there was a catch.

Yeah, but it's not a bad one to be fair and there are good deals out there. You'll be able to find an account to suit your own situation, no problem. Don't forget that a Mini Cash ISA a great way of saving a bit of money for a rainy day, and you could do a lot worse with your money, a lot worse.

RIGHT THEN, WHERE DO I GET ONE?

To start searching for a Mini Cash ISA, click here.

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 Always listen to experts. They'll tell you what can't be done, and why. Then do it. 

Anon