Hargreaves Lansdown Raises Cash ISA Rate to Best-Buy 4.52%

Hargreaves Lansdown has increased the interest rate on its cash ISA to 4.52%, positioning it as a best-buy in the easy-access savings market. This move comes as other providers, including Trading 212 and Plum, offer competitive rates on cash ISAs, often with introductory boosts.

The Hargreaves Lansdown cash ISA, a collaboration with Shawbrook Bank, was initially launched two weeks prior at a 4.3% rate. Customers who opened the account at that rate will automatically receive the updated 4.52% interest. Trading 212 and Plum currently offer 4.51% and 4.48% respectively, but these rates are set to decrease after a 12-month promotional period to 3.6% and 2.52%.

Deposits in the Hargreaves Lansdown cash ISA are protected by the Financial Services Compensation Scheme (FSCS) up to £120,000, with this limit applying to Shawbrook Bank as a whole. Any existing funds held with Shawbrook Bank will count towards this protection limit.

While Hargreaves Lansdown's offering is now a leading easy-access rate, potential savers should be aware of certain conditions. Unlike some competitors, Hargreaves Lansdown's cash ISA is not flexible. This means that if funds are withdrawn and then re-deposited within the same tax year, they will count against the individual's ISA allowance. Both Trading 212 and Plum offer flexible ISAs, allowing re-deposited funds to remain within the tax-free allowance.

Furthermore, Hargreaves Lansdown does not facilitate direct transfers into its cash ISA. To transfer an existing ISA, funds must first be moved to a Hargreaves Lansdown stocks and shares ISA before being transferred internally to the cash ISA. This process requires opening a cash ISA with a minimum of £1, which could be an issue for individuals who have already utilized their full annual ISA allowance.

Some customers have noted that Hargreaves Lansdown has previously reduced rates on its cash ISA products. Savers are advised to monitor their interest rates, as the platform offers accounts from various providers, allowing for easy switching to better rates. The company has confirmed that savers are notified 14 days in advance of any rate changes.

For those seeking a fixed-rate option, Coventry Building Society offers a one-year fixed-rate ISA at 4.6%, which currently surpasses Hargreaves Lansdown's easy-access rate. This account requires a minimum deposit of £1 and accepts ISA transfers. Aldermore Bank offers a two-year fixed-rate ISA at 4.61%, requiring a £1,000 minimum deposit and also accepting transfers.