ISA accounts how does it actually work? Please explain.

[Soreearr]

I had my ISA account with my bank account for more than 20 years but I never used it, particularly as I never have any money to put in.
I’m on low wages, shopaholic and overall not good with money.
However some months I got some money gifted from my mum about £500 and to not to spend them straight away and not having them too visible to myself in my current account I put them into the ISA account.
I noticed it got some interest of few pounds this month and I started looking into it now.
My bank now offers me a various ISAs accounts with higher interest rates up to 4% which on £500 would be £20 per month??
I spoke to the bank this morning and they confirmed that that’s true if I do maximum of 3 widrawals per year then yeah the interest would be 4%.
Do I understand it right?
Would I be able top it up with various amounts?
My mum ( lives abroad) has money she wants alsways to gift me and my daughter and once , twice per year she send me some, not point having it stuck i
under my or her mattress's if I can get some extra interest.
God I’m so silly I never knew about anything like this.. I think it’s partly as I’m rubbish with money, always spend …

4% would be £20 a year, but otherwise that is right.

Thank you, yes I got it wrong I guess. I just opened the account with 4.2% so will see. Better than nothing..

You generally get a better rate from an ISA if you're able to leave the money in there rather than dipping in and out like a 'regular' savings account.

Each year you are allowed to save £20k in an ISA. The benefit is that interest is tax free. However, if you are a basic rate taxpayer, you can earn up to £1000 tax free anyway which at 4% interest is about £25k of savings. If you’re not likely to save that much, there might be higher rates available in non-ISA accounts.

Agree with pp if you are a basic rate tax payer you can get better deals with non ISAs. I have an instant access account with paragon and get 5% and there are better rates if you fix fir one plus years. Some fixed accounts offer monthly interest, but you can’t add to the sum invested.

Thanks all. Yes I understand it now better.
I don’t have a lot to put in, but just because all I have just sits there, I thought I may some interest may as well.
My mum keeps all her money under her bed ( she is very old fashioned) have no bank account as she scared of using ATMs and cards atd, she can’t shop online or anywhere - anything.
When she sends me money to my account she has to do it through a random bank on the street and she pays fee of £100 for this as she has no her bank account..

Who is your main bank account with? I can get 6% savings with Lloyd's or I think first direct does 7%.

If you're on a low wage the government offers a savings account where they top up 50p for every £1 you save, but looks like they only give you the full amount after 4 years. But if you could manage to save £50 a month yourself you could get a free £1200 by the end.
https://www.gov.uk/get-help-savings-low-income