Does loyalty pay when it comes to cash ISAs?
With the end of the tax year ISA deadline fast approaching, many providers have upped their cash ISA rates for savers who also have a current account with them. But does loyalty really pay? MoneySavingExpert.com investigates.
Our research shows that all of the top current account providers – based on rewards given and customer service ratings – offering linked cash ISAs unsurprisingly pay much higher interest rates to their own customers compared to their open to all ISAs.
However when it comes to easy-access ISAs, the majority of providers linked accounts only match, rather than beat, the market leading account open to everyone.
Only one bank – HSBC – beats the top open-to-all market leading rate of 1.5%, but to get its 1.6% rate you have to have its Premier current account, which only those with savings or investments of at least £50,000 with HSBC, or an annual income of at least £100,000 plus either a mortgage or an investment, life insurance or protection product with HSBC can get.
See our Best Bank Accounts guide to get interest of up to 5% and switching bonuses of up to £150, plus our Top Cash ISAs guide for the best buys.
When it comes to fixed ISAs, only Santander offers a separate fixed product to its own 123 customers – you need to hold either a 123 current account, 123 credit card or be a Select customer to qualify.
Here its two-year fix pays 2%, just beating the 1.95% market leading rate open to everyone.
Some providers have upped cash ISA rates for savers who also have a current account with them.
Does loyalty pay?
Here's a full table of how the rates compare.
Are cash ISAs linked to current accounts any good?
| Provider | Easy-access ISA rate for current account customers | Fixed ISA rate for current account customers | Easy-access open-to-all ISA rate |
|---|---|---|---|
| First Direct | 1.3% - 1.5% (i) | n/a | n/a |
| Halifax | n/a | n/a | 1.05% |
| HSBC | 1.4% - 1.6% (ii) | n/a | n/a |
| Lloyds | n/a | n/a | 0.75% - 1% (i) |
| M&S Bank | n/a | n/a | 1.3% |
| Nationwide | 1.5% | n/a | 1.25% |
| Santander (iii) | 1.5% | 2% (iv) | 1% |
| TSB | n/a | n/a | 0.75% |
| Top open-to-all rate (iv) | 1.5% with the Post Office (v) (vi) | 1.95% with the Post Office (iv) (vi) | 1.5% with the Post Office (vi) |
| (i) The rate you get depends on the balance of the ISA. (ii) The rate you get depends on which current account you hold with HSBC. Those with its Advance current account also earn £10/month (up to £120/year) when they deposit £25/month or a £300 lump sum into its ISA. (iii) 123 current account/credit card holders & Select customers only. (iv) The rate is fixed for two years. (v) Top rate account that allows transfers in. (vi) The Post Office doesn't have a separate ISA that pays more to its own current account customers. | |||
'Don't switch current account for the ISA alone'
Helen Saxon, senior money writer at MoneySavingExpert.com, says: "It's probably not worth opening a current account purely to get a linked ISA, as in the vast majority of cases you can earn the same amount of interest with an ISA that's open to anyone regardless of their bank provider.
"What you should be considering is whether you have the right current account for your needs, as serious cash is available to switchers, and then separately looking at whether a cash ISA is for you and how to get the best rate.
"That said, if you're happy with the service and rewards provided by your bank, linked ISA accounts are a nice boon for those who have access to the higher paying accounts."
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3 December 2024
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