A simples guide

Santander ISA

Santander is one of the biggest banking names on the high street with a wide range of ISAs to choose from. So let’s take a look at just what’s on offer.

How does an ISA work?

An ISA is an ‘individual savings account’. You can open one if you’re over 16 (18 for some products, including stocks and shares ISAs) and live in the UK. Any interest you earn on money you put in an ISA is tax-free, so it’s a worthwhile investment to make.

If you’re eligible to open an ISA, there’s a limit to how much money you can put in. This limit changes every financial year; for 2017/2018 the limit is £20,000. You can have more than one ISA, but you can’t go over your allowance in any one financial year.

Standard savings accounts, on the other hand, are liable to tax. If you’re a lower-rate taxpayer, you can earn up to £1,000 interest tax free; any interest you earn after that is subject to tax. For higher-rate taxpayers, the allowance is £500. If you earn £17,000 or less each year, you won’t pay any tax on your savings interest at all.

What types of ISAs does Santander offer?

Santander offers no less than six ISAs, so you’re spoilt for choice. Here’s the lowdown:

Two-year fixed rate ISA: At the moment this offers the best interest rate of all Santander’s ISAs. And if you hold a Santander 1|2|3 account or are a Santander Select customer, then you get an even better fixed rate with this ISA. You have to deposit a minimum of £500 and you can’t make partial withdrawals. If you do want to take your money out, you have to remove all of it and you’ll have to pay a penalty equivalent to 120 days’ interest.

eISA: As you’d expect from the name, you manage this account online. You get instant access to your funds and you’re not locked in for two years at a certain rate – key if the base rate does move. Again, if you already bank with Santander and are a Select or 1|2|3 customer, then you get preferential rates of interest. You’ll have to deposit a minimum of £500 but interest applies to balances from just £1.

Easy ISA: Designed to do exactly what it says, this gives you instant access to your money and you have the flexibility to manage your account online, through telephone banking and also in branch.

Help to buy ISA: This is a government-backed ISA where you get a 25% bonus on balances from £1,600 up to £12,000. The aim of the scheme is give first-time buyers more equity in their property. The money is paid out after the house sale has gone through, so it can’t be put towards solicitors or estate agent fees.

Stocks and shares ISA: If you have some spare cash and are happy to lock it away for several years, then this could give you better returns in the long run compared to a traditional savings account or ISA. But, there are risks. For example, your capital isn’t guaranteed and the value of your investment can fluctuate, depending on the stock market and the shares you hold.

Junior ISA : If you have parental responsibility for a child under 16, you can open a junior ISA for them. If your child is 16 or 17, they can open the ISA themselves. Junior ISAs offer the same tax-free savings opportunity as a grown-up ISA, but the allowance is smaller. For the 2017/2018 financial year, the most you can put into a junior ISA is £4,128.

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Is a Santander ISA right for me?

That’s really up to you. If you’re a creature of habit and you already bank with Santander, it can make sense to have all your accounts in place, plus you’ll benefit from slightly better interest rates.

But having an ISA is all about making your money work for you and that means it has to earn as much interest as it can. So, take the initiative and compare ISAs right here with us at comparethemarket.com  

All information correct as of 31 March 2017.

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