Hargreaves Lansdown has entered the cash savings market with the launch of its own cash Isa account.
The investment platform giant is taking on high street banks with its new easy-access cash Isa in partnership with challenger bank Shawbrook, paying a rate of 3.45 per cent.
The interest rate is variable, but Hargreaves Lansdown said it would never pay less than 0.65 percentage points lower than the Bank of England base rate, which today stands at 4 per cent.
Hargreaves Lansdown already offers cash savings products through its savings platform Active Savings in partnership with other banks, but this is the first time it has launched its own branded savings account.
Customer deposits will be held by Shawbrook, meaning up to £85,000 of savings accounts held with the bank will be protected under the Financial Services Compensation Scheme, but Hargreaves Lansdown controls the interest rate on the Isa.
> Find out more about Hargreaves Lansdown’s cash Isa*
Investment platform giant Hargreaves Lansdown has partnered with Shawbrook Bank to launch its own cash Isa
Customers can deposit between £1 and up to £1million if transferring an Isa held with another provider.
Cash savings has become a big business for Hargreaves Lansdown as Active Savings* now serves 400,000 clients with their cash savings, totalling more than £15.1billion.
The average cash Isa rate paid by the biggest high street banks, including the likes of Barclays, Lloyds, NatWest, Santander, HSBC and Nationwide is 1.28 per cent – so Hargreaves Lansdown is taking them on with its 3.45 per cent rate.
>See the best cash Isa rates on This is Money’s cash Isa best buy tables
But it is also competing with the smaller challengers it partners with on Active Savings, many of whom offers the best rates* and have their own Isas outside of the savings platform.
Mark Hicks, head of Active Savings by Hargreaves Lansdown says: ‘The highest rates in the savings market are often dominated by challenger banks and smaller new entrants who attract clients in with high rates or bonus rates which very quickly drop after the first 6-12 months.’
Those who hold investments with Hargreaves Lansdown earn interest on any uninvested cash held in their investment accounts at a rate of up to 2.75 per cent for cash sums of £100,000 or more.
Active Savings will now also be available to use on Hargreaves Lansdown’s mobile app, the investment platform also announced.
> Read more: The best stocks and shares Isas – how does Hargreaves Lansdown stack up?
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