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Barclays ISA Review 2020 – Is it the Best ISA?

Know everything about Barclays ISA and types of returns on offer.
Kane Pepi
Author: Kane Pepi

Last Updated: February 28, 2020
Business colleagues having a chat while pointing at a computer screen - Photo by John Schnobrich on Unsplash
Business colleagues having a chat while pointing at a computer screen - Photo by John Schnobrich on Unsplash

Barclays bank logo

If you’ve got a bit of spare cash sitting to one side and you’re looking to earn some interest, then you have a plethora of options at your disposal. With that being said, if you have virtually no tolerance to risk, then you might be best off putting your savings into a risk-free ISA.

Once such provider that is looking to dominate this space is Barclays – who now offer a full range of ISA accounts for you to choose from. If you’re thinking about opening an ISA account with Barclays, or you want more information about the types of returns on offer, then be sure to read our Barclays ISA Review.

Although most ISAs are risk-free, not all of them are. Most specifically, Stocks and Shares ISAs can lose you money if your chosen investments take a hit in the markets.

Pros and cons of Barclays ISAs

The Pros

  • Backed by the FSCS – risk-free investment (Not Stocks and Shares)
  • Offers a variety of ISA types
  • Most accounts can be opened online
  • Usually get started from just £1
  • Some ISAs do not require you to open an account

The Cons

  • Interest rates are super-low

Barclays ISAs: What ISAs are offered?

Barclays Bank logo

Barclays offers a good selection of ISA accounts. Scroll through the following accounts to find one that meets your individual needs.

1. Instant Cash ISA - Up to 0.55% AER per year

The bog-standard Cash ISA offered by Barclays is that of its Instant Cash ISA. As the name suggests, this particular account type is best suited to those of you that will likely need to access your cash on-demand. As such, you will be able to make withdrawals from your Instant Cash ISA at any given time. However, this comes at a cost, as you will only be able to earn a maximum of 0,.55% AER per year

Moreover, in order to get the highest rate of 0.55%, you will need to deposit at least £100,000 into your account. This wouldn’t make any sense anyway, as the FSCS will only protect you up to to the first £85,000. For deposits of less than £30,000, you will only receive 0.40% AER. For anything between £30,000 and £100,000, this moves up a smidgen to 0.45% AER. In terms of account minimums, you can get started from just £1.

You will need to be a customer of Barclays in order to get the Instant Cash ISA, as this particular account type is designed for those looking to make regular withdrawals. Finally, Barclays will not charge you anything to transfer your existing ISA funds in, which is great.

Key Points:

✔️ Up to 0.55% % AER interest per year

✔️ Required to deposit at least £100,000 to get the top-tier rate

✔️ Deposits below £30,000 get just 0.40% AER per year

✔️ Get started from just £1

✔️ Required to have an account with Barclays

✔️ No fees for transferring existing ISAs in

2. Help to Buy ISA - up to 2.58% AER per year

If you’re in the process of saving for your first home purchase, it is well worth considering a Help to Buy ISA. For those unaware, not only will you benefit from tax-free interest, but the government will top up 25% on everything you save up to £12,000. This means for that every £100 you save into your Help to Buy ISA, the government will add £25 – and that’s excluding the interest that you will earn from Barclays.

With that being said, the Barclays Help to Buy ISA pays a somewhat competitive 2.58% AER per year. Take note, this rate is variable, so it could change depending on market conditions. Nevertheless, it is also important to note that the Barclays Help to Buy ISA comes with account limitations. You will only be able to deposit a maximum of £1,200 during the first month of opening the account.

After that, you can only deposit a maximum of £200 per month. On the other hand, the Barclays Help to Buy ISA allows you to make an unlimited amount of withdrawals without you being penalized. Finally, the ISA is protected by the FSCS, and you can get started by opening an account online.

Key Points:

✔️ Pays 2.58% AER per year

✔️ The interest rate is variable

✔️ UK government will add 25% to your savings (up to £12,000)

✔️ Access your money at any time

✔️ Protected by the FSCS

✔️ Open an account online

3. 1-Year Flexible Cash ISA - 0.75% AER per year

If you think there is a chance that you might need to access your ISA funds, but you don’t necessarily need an unlimited number of withdrawals, then we would suggest checking out the Barclays 1-Year Flexible Cash ISA. Although the account is somewhat similar to the Instant Cash ISA, this particular account only permits three withdrawals.

While you will not be penalized for making your three free withdrawals, it is important to note that you will only be able to withdraw a maximum of 10% of your overall balance. As such, this could limit you in the event that you need access to a much larger proportion of your cash, so do bear this in mind. In terms of the fundamentals, the 1-Year Flexible Cash ISA pays 0.75% AER per year.

The interest rate is fixed for the full 12 months, so you don’t need to worry about market conditions. You will be able to open an account online, with the minimum deposit set at just £1. Furthermore, you will not be charged anything if you want to transfer-in your existing ISA funds.

Key Points:

✔️ 0.75 AER interest per year

✔️ Interest rate is fixed, so no need to worry about market forces

✔️ Maximum of three withdrawals

✔️ You can only withdraw 10% of your total balance at any given time

✔️ FSCS protected

✔️ Get started from just £1

4. Premier 1-Year Flexible Cash ISA - 0.85% AER per year

The Premier 1-Year Flexible Cash ISA being offered by Barclays Bank is exactly the same as 1-Year Flexible Cash ISA we discussed above – apart from the interest rate. While the latter pays 0.75% AER per year, the Premier version pays a higher rate of 0.85%. However, this comes with one key condition – you will need to be a Premier customer at Barclays Bank.

For those unaware, Premier current accounts at Barclays do not come with any monthly fees, and they do come with a full range of other benefits such as fee-free international payments and a dedicated customer support team. However, in order to be eligible, you need to have an annual income of £75,000 or more that is subsequently deposited into your Barclays account, or have saved/invested more than £100,000.

Key Points:

✔️ Pays 0.85% AER interest per year

✔️ Only available to Premier account holders at the bank

✔️ Eligibility requires £75,000 annual income or an investment of £100,000+

✔️ Make up to three withdrawals

✔️ Only withdraw up to 10% of your ISA balance

✔️ No fees for transferring funds in

5. Stocks and Shares ISA - Interest % depends on investments

The final ISA being offered by Barclays that is worth considering is that of its Stocks and Shares ISA. This particular account type is perfect if you have an interest in the financial markets, and thus – you’re thinking about building a stocks and shares portfolio. In doing so, you can benefit from a 2019/20 annual ISA allowance of £20,000 without paying any capital gains on your profits.

On the flip side, the Stocks and Shares ISA at Barclays does come with its risks. While the other ISAs we have mentioned so far are virtually risk-free, insofar that you are guaranteed to grow your money, Stocks and Shares ISAs are dependent on your chosen investments.

For example, if your shares portfolio is not performing well in the markets, then you stand the chance of losing money. With that being said, your tax savings would be irrelevant in this case, as you would have no capital gains! If you do opt for the Barclays Stocks and Shares ISA, you can build your portfolio via the platform’s Smart Investor dashboard.

Key Points:

✔️ Higher risk – investments can go and down

✔️No guarantee that your money will grow

✔️ Best if you are able to hold onto your shares for at least 5 years

✔️ Choose your own investments via the Barclays Smart Investor dashboard

Is a Barclays ISA safe?

As is the case with the vast majority of ISAs in the UK, your Barclays ISA will be protected under the Financial Services Compensation Scheme (FSCS). This means that your savings are protected up to the first £85,000. Take note, this is per institution as opposed to per account, so you should avoid investing more than £85,000 if you want to remain 100% risk-free.

On the other hand, you will not be engaging in a 100% risk-free investment if you opt for the Barclays Stocks and Shares ISA. The reason for this is that your gains are determined exclusively by your chosen investments. For example, if you hold stocks that have gone down in value in comparison to the price you originally paid, then your overall investment will be worth less than what you started with.

How much can I invest into my Barclays ISA per year?

As per the 2019/20 limits imposed by the UK government, you will be able to invest up to £20,000 for the year. You can invest the £20,000 limit in one fell swoop, or in instalments throughout the tax year. As such, if you are opening a Barclays ISA mid-year, then you should attempt to inject the maximum annual allowance before the new tax year starts in April 2020.

It is also important to note that you can spread your ISA investments out across multiple accounts. For example, if you want to place £15,000 into the Barclays Instant Access ISA account for a risk-free return, and place the remaining £5,000 into the Barclays Stocks and Shares ISA – this is perfectly fine.

screengrab of the ISAs investment page of Barclauys bank

 

Just remember, certain ISAs at Barclays Bank do come with limitations. For example, if you opt for the Help to Buy ISA, you will only be able to deposit a maximum of £1,200 when you first open your account (anytime during the first calendar month). Moreover, the same ISA will only permit £200 per month thereon, so make sure that you take this into consideration.

FAQs

Do I need to have an account with Barclays to open an ISA?

In some cases, yes. For example, if you want to open an Instant Cash ISA, you will need to have a current account. This is because you will have the option of making cash withdrawals on-demand. Moreover, if you're looking to take advantage of the 0.85% AER that comes with the Premier 1-year ISA, you will need to have a Premier current account at the bank.

Is a Barclays Stocks and Shares ISA safe?

Unlike a more conventional Cash ISA, the Stocks and Shares ISA available at Barclays is not 100% risk-free. The overarching reason for this is that your profits and losses will be dependent on your chosen investments. Don't forget, Barclays does not pay you any interest for holding a Stocks and Shares ISA. On the contrary, you are merely benefiting from a favourable tax advantage.

How much can I put into a Barclays ISA?

The limits fall in-line with that of the 2019/20 annual allowance, which stands at £20,000 per year. You are free to split your annual allowance across different ISA accounts, as long as you do not exceed the annual limit. Take note, the annual limit is reviewed by the UK government every year, so it is likely to change in subsequent years.

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Kane Pepi

Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.