Halifax ISA Review 2021 – Is it a Good Investment?

If you are looking for the highest paying Cash ISA available at Halifax, at the time of writing this comes in the form of its ISA Saver Fixed account. In a nutshell, the ISA pays an annual AER of 0.55%. This rate is nothing to write home about, as you can easily earn more interest elsewhere. Nevertheless, the good news is that the 0.55% AER rate is fixed, so you do not need to worry about market conditions. As such, you will always know exactly how much your money is going to be worth.

Moreover, Halifax also gives you the choice of having your interest paid out monthly or annually. In terms of the fundamentals, you will need to lock your money away for two years. This is much longer than the fixed terms currently being offered by other high street banks and building societies. As a result, you should only proceed if you are 100% sure that you won’t need to make a withdrawal before the 2-year term concludes.

If you do need access to your cash before reaching the 2-year term, the only option that you will have will be to close the account. However, Halifax notes that you will lose the equivalent of 180 days interest. It is also important to note that the Halifax ISA Saver Fixed account requires a minimum deposit of at least £500.  Finally, you can open an account via the Halifax website, in branch, on the telephone, or via the mobile app.

At the other end of the Halifax ISA spectrum, the ISA Saver Variable account is suited to those of you that want the freedom of accessing your cash at any time. Unlike the Fixed Cash ISA – which requires a lock-up of 2-years, the Saver Variable offered by Halifax allows you to make withdrawals whenever you see fit. As such, the account operates in a similar nature to a standard savings account.

While it is notable that you will be able to access your cash on-demand, it is crucial to also note that the ISA pays a measly 0.20% AER per year. As such, it’s barely worth considering as there are heaps of alternatives in the market that pay more, while still giving you the freedoms of instant withdrawals and risk-free gains.

Nevertheless, Halifax does at the very least allow you to open the ISA with just £1. Moreover, if you do make a withdrawal, the ISA account allows you to re-gain the allowance if you replace the withdrawal further down the line. Finally, the interest is paid once a year, 12 months from the date you open the account.

While the first two Halifax ISAs we have reviewed thus far have fallen short in the interest department, the bank is much more competitive with its Help to Buy ISA. As such, if you are in the process of buying your first home, or you are looking to start saving for that all-important deposit, then you will benefit from 2.25% AER per year in interest.

Not only will you receive interest from Halifax, but you’ll also benefit from the 25% top-up rate that the UK government provides on Help to Buy ISAs. This means that for every £200 you deposit, the government will add £50, which is great. Don’t forget, this is only for the first £12,000, meaning that the maximum government top-up amount stands at £3,000.

Nevertheless, in terms of the fundamentals, you will need to deposit between £1 and £1,000 within 21 days of opening the account. Moreover, once you have made your initial deposit of up to £1,000, you will then be capped at £200 per month. While the Halifax Help to Buy ISA does permit withdrawals, you will lose your government top-up funds, so avoid this at all costs. Finally, while you are able to open an account via the Halifax website, the bank requires you to close the account in branch or by post.

If you are looking to start putting some money away for your child’s future, then we would highly recommend the Junior Cash ISA currently being offered by Halifax. In fact, it’s one of the most competitive ISAs of its type. First and foremost, the Junior Cash ISA comes with an AER of 3.00%, with the interest being paid out annually. However, it is also important to note that the 3.00% rate is variable, meaning that it can change at any time.

Moreover, we also like the fact that the Halifax Junior Cash ISA allows you to get started with just £1. In terms of the fundamentals, this particular ISA is available to all UK residents, as long as your child is below the age of 18. Most importantly, you will not be able to withdraw the money from the account until your child turns 18. As such, you need to be absolutely sure that the funds you are putting away for your child will not be needed.

When your child does turn 18, the account type will revert to a standard adult Cash ISA until a withdrawal is requested. The Halifax Junior Cash ISA is also fully protected under the FSCS, meaning that as long as your balance does not exceed £85,000, your funds are 100% risk-free. Finally, Halifax gives you the option of opening the ISA online, although when it comes to the redemption date, you’ll likely need to do this in-branch with your child.

If you have read through the four Halifax Cash ISAs that we have discussed thus far, you’re probably somewhat underwhelmed by the amount of interest on offer. While the Junior Cash ISA and Help to Buy ISA does pay 3.00% and 2.25% respectively, the standard Cash ISAs on offer come with super-low rates. With that being said, the final option available to you is to consider a Stocks and Shares ISA.

For those unaware, this is where you keep your stocks and shares at Halifax and subsequently avoid paying any tax on your capital gains up to the £20,000 annual ISA allowance. As such, you won’t receive any interest from Halifax from the other ISAs we have reviewed. Instead, your gains (or losses) are based on the underlying shares that you have within your portfolio.

On the one hand, you do stand the chance of making much more than the other ISAs on offer. However, this isn’t guaranteed, as the value of your shares could just as easily go down. This is why you are best advised to hold on to your shares for at least five years, as this will allow you to ride out the ups and downs.