A simples guide

Post Office ISA

If you’re only interaction with the Post Office has been the mail delivery or perhaps buying some stamps, you might be surprised to hear that they’re also a big player when it comes to providing savings accounts and financial services.

In a sector dominated by the banks and building societies, the Post Office offers something a little different if you’re looking to invest in an ISA.

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What’s an ISA?

Before we look at the specific ISA options available from the Post Office, let’s quickly look at how they work. An ISA is an Individual Savings Account. Individual as they’re available to every UK citizen. In many ways, they’re similar to other savings accounts in that you pay money in and it earns you interest.

The key difference and advantage of the ISA is that all the interest earned in it is tax free. There’s a limit to how much you can save in an ISA each year. This is called your ISA allowance and it is set by the government. In this current tax year, it is £15,240, next year it will increase significantly to £20,000.

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What ISA options do the Post Office offer?

The Post Office currently has three cash ISA’s available, each with different rates of interest and coming with different terms and conditions.

The first is the Post Office Online ISA. As the name suggests, this ISA is managed online giving you access 24/7. The current ISA named Easy Access Issue 8 pays a higher interest for the first 12 months. After this, the rate reverts to a lower standard rate. If you’re interested in this account, you need to remember that this account only allows you to deposit funds once and you’re unable to make withdrawals for any fixed period.

The Premier Cash ISA can be opened with a minimum of £100 or via a transfer from an existing ISA. The ISA does allow two withdrawals per year but once withdrawn, your money will lose the tax advantages of ISAs and cannot be replaced within this ISA year without affecting your annual ISA allowance. Again, the interest is higher for the first 12 months before reverting to a standard lower rate.

If you’re happy to lock in your money for a year, the Post Office offers a Fixed Rate Cash ISA which pays a higher rate of interest. While you can transfer in a balance from an existing ISA, you can only make one deposit and no withdrawals are allowed in the period. 

Remember to compare

The Post Office is a British institution, but that does not mean you should commit to its products without looking at the alternatives first. Major banks and financial institutions will offer ISAs and ideally you would compare them all before you commit. Use our Cash ISA comparison service to help find the right ISA for you.

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