HSBC Loyalty Cash ISA

Plan for the future, free from UK income tax.
Min. Deposit:
Notice Period:
AER Interest Rate:

0.65% to 0.85%

(variable rate)

What is a cash ISA?

An Individual Savings Account or ISA for short, is an investment product offered in the UK by regulated financial institutions such as banks and building societies.

A cash ISA is effectively the same as a regular savings account except that the interest earned on the money is tax-free. To open a cash ISA you need to be at least 16 years of age.

There are limits on how much you can deposit into the product in any single tax year (6 April to 5 April), which are determined by the UK government. For the current 2018/19 tax year, that amount is £20,000 in any one type of ISA account.

Cash ISA considerations

It’s important to compare as many ISA products as possible in order to find one that suits your requirements. Here are some of the main factors to consider:

Interest Rate

The interest rate applied to your ISA savings will determine the amount of money you can earn over the period and you should look for those that offer the highest one. ISA Interest rates will either be variable or fixed.

What is a Variable Rate ISA?

A variable rate means that the company offering the product may change the rate up or down during the 12 months. Often this rate change is triggered by a change in the Bank of England base rate. However, you should always check the terms & conditions with the provider as to their policy regarding rate changes.

Some accounts also operate tiered variable rates based on the level of your balance with higher rates applied when your savings reach a certain amount.

What is a Fixed Rate ISA?

A fixed rate of interest means that you will always get the same rate throughout the period on your ISA savings. Products offering fixed rates on Cash ISAs will often be for a set period of time, usually 1 or 2 years.

Some people like the idea of fixed rates as it gives them peace of mind in knowing that they will get always get the same rate on their savings and can more easily predict the amount they will earn in interest, regardless of potential interest rate changes in the overall economy.

There are certain cash ISA accounts that offer bonus or loyalty rates. These are often tied to already having a current account or other product with the provider

Notice period

Always check what the restrictions are regarding getting access to your money. Whilst many accounts will offer instant access to your funds, some products may either limit the number of withdrawals you can make or prevent you from making any withdrawals, except to close your account.

You should also take note of any charges that may be incurred for withdrawing money from your ISA cash account together with any early closure fees.

Minimum opening deposit

Most cash ISAs enable you to open an account with just £1 but some fixed rate accounts may require a much higher initial deposit in the hundreds or even thousands of pounds.

Access and management of your account

In addition to the normal in-branch and over the telephone account management services, the vast majority of cash ISAs can now be accessed via online or through mobile banking using the provider’s own app.

For more information, visit the UK government website on Individual Savings Accounts (ISAs).