Hargreaves Lansdown is offering a new cash ISA to sit alongside its investment option. It offers a different type of ISA allowing you to save tax free, giving you a different way to access your money.
What is a Hargreaves Lansdown (HL) cash ISA?
A cash ISA is a highly tax efficient way to save. Unlike a regular savings scheme all interest earned will be tax free. When you take out an account with HL, you’ll have a cash ISA with HL, but can select cash ISA savings products from individual banks and building societies. This means you can manage everything online alongside any existing HL investments you have.
They currently offer a choice between an easy access account or a limited access savings product from Coventry Building Society, but they plan to partner with more in the future. This allows you to balance between short term access and long-term savings goals.
You can add money to one or both products as long as you remain within your ISA allowance (£20,000 for the 2021/22 tax year).
How does it differ from a Hargreaves Lansdown (HL) investments ISA?
The main difference between the two is that one is a savings product and the other is investment. A cash ISA allows you to earn a fixed interest rate with your cash. This does not change, regardless of market movements. A stocks and shares ISA puts your money in a variety of assets with your return depending on fund performance. It’s a higher risk option and you may get back less than you put in.
You can invest as little as £100 or £25 per month and have full control over what you invest in. This is a good product for people who are comfortable investing and with the risks that entails. The product also offers the flexibility of taking your money out at any time, although this will impact your returns.
Hargreaves Lansdown (HL) Cash ISA pros and cons
- Pros – This is a good option if you want to invest in an ISA but don’t want to risk investing it in stocks and shares. Although it may offer a lower interest rate, it does offer a guaranteed return. It also gives you plenty of flexibility with the ability to choose between instant access to your cash or more limited access.
- Cons – The downside is that although you might not be paying tax on your interest there might not be much of it. Although the investment ISAs come with a degree of risk, they do offer the prospect of higher returns. You can also earn up to £1,000 tax free in a regular cash savings account so the tax-free ISA benefits are not that clear cut.
Hargreaves Lansdown Cash ISA Special Offer
HL are currently running a special offer on their cash ISAs. If you invest at least £10,000 by August 11th you could benefit from an Amazon gift card. The value of the card starts at £10 when investing £10,000 to £15,000 and rises to £20 when you hit £20,000.
Tom Cropper has been writing for us since 2015. Tom is a financial journalist and his work has appeared in titles such as the Guardian, Euromoney and many others.