Britain’s biggest investment platform, Hargreaves Lansdown, has launched its first-ever cash ISA product, offering customers the ability to save up to £1 million in a single cash product.
The new easy-access cash ISA, launched in partnership with challenger bank Shawbrook, will initially pay a variable interest rate of 3.45%.
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The savings will be held by Shawbrook Bank and will be protected by the Financial Services Compensation Scheme (FSCS), which protects up to £85,000 per person, per bank, building society or credit union. Hargreaves Lansdown will directly control the interest rate offered to customers.
How does Hargreaves Lansdown’s cash ISA compare to others on the market?
What differentiates Hargreaves Lansdown’s new cash ISA from the many other options already on the market is its guarantee to never pay an interest rate more than 65 basis points below the Bank of England base rate.
At present, the base rate stands at 4% after the Bank of England’s Monetary Policy Committee (MPC) decided against an additional interest rate cut amid high inflation.
With the base rate at this level, the lowest possible interest rate that Hargreaves Lansdown can offer on their new cash ISA right now is 3.35%, though this minimum level will change in line with shifts to the base rate.
However, Hargreaves Lansdown’s 3.45% interest rate is far from the best available rate on the market at the moment.
The top easy-access cash ISA rate is almost a full percentage point higher at 4.38%, offered by Trading 212.
The rate offered is certainly not poor, being significantly higher than the average no notice cash ISA rate of 2.77%, according to Moneyfacts.
Hargreaves Lansdown already offers customers the ability to save in cash ISAs paying up to 4% interest on their platform through other banks, but the new product is the first to be done directly through Hargreaves Lansdown.
Hicks said: “While clients will be able to access better rates on our savings platform on an individual bank basis, this product will provide consistency and diversification benefits to savers who don’t want to have to continually switch products around to generate a competitive rate.”
He added: “Cash ISA providers often pay bonus rates to attract clients, but these rates expire, leaving them with a longer-term, lower rate. [The new product] will allow us to accelerate the growth of our platform, provide better client outcomes and give savers greater choice from a brand they trust.”
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