Skipton Building Society will launch the UK's first cash Lifetime ISA on Thursday. It'll offer an annual interest rate of just 0.5% – but crucially if you use one to save, you'll also get a 25% state bonus when you buy a home or turn 60.

The cash Lifetime ISA (LISA) can be opened with just £1. And while the annual interest rate is low compared with the top cash ISA rate of 1.05%, of course it has zero competition. The only other LISAs currently available are stocks & shares LISAs which come with added risk – the likes of Hargreaves Lansdown, Nutmeg and the Share Centre offer one of these.

See our Lifetime ISA guide for full info on how they work and the top products.

What's a Lifetime ISA?

Available for those aged 18-39, LISAs are designed to be used to save for a property or retirement. They allow you to save up to £4,000 a year, with a 25% state bonus paid to go towards the purchase of a property worth up to £450,000, or for when the account holder turns 60.

Savers have an annual ISA allowance of £20,000 that they can split between different types of ISAs, including the new LISA.

For more details, see our full Lifetime ISA guide.

How will the Skipton cash LISA work?

The cash LISA from Skipton BS has to be opened and managed online, and pays interest annually. You'll be able to transfer in existing ISAs to it, including cash, stocks & shares and Help to Buy ISAs up to the maximum £4,000 annual LISA limit (plus any money saved in a Help to Buy ISA before 5 April 2017).

If you already opened a stocks & shares LISA when they launched back in April but don't want the added risk that an investment product comes with, you'll also be able to transfer to Skipton's cash LISA. See Lifetime ISAs for full info on the Skipton offering, including whether or not you should transfer a Help to Buy ISA.

Will anyone else offer a cash LISA?

We've asked several major banks and building societies if they have any plans to offer a LISA. Santander, Clydesdale and Yorkshire Banks, Tesco Bank, TSB, Sainsbury's Bank, Co-op Bank, NatWest/RBS and Lloyds Banking Group all told us they're not currently planning to launch one, while HSBC, First Direct and Barclays said they're continuing to work through the details of the product.

Additional reporting by Rosie Bannister.