Natwest ISA Review 2021 – Is it a Good ISA?

If you’re looking for a standard Cash ISA that comes with the guarantees of long-term growth, then you might want to consider the Variable Cas ISA being offered by Natwest. The ISA in question pays a top AER rate of 0.85% per year. But wait! You will only get the top-tier rate if you are prepared to inject at least £50,000 into the ISA. Anything less than this and you will get a less favourable rate.

For example, investments of between £1 and £9,999 will yield a measly 0.20%, and investments of between £10,000 and £24,999 will pay 0.35%. Alternatively, you will get 0.60% AER if you are willing to invest between £25,000 and £49,999. Irrespective of what investment level you do opt for, these rates are nothing short of below-par. The reason for this is that you should be able to find an alternative ISA provider that offers at least 1%. Moreover, you also need to make some considerations regarding the variable interest rate. While the rate could one day go up, equally, it could just as easily go down.

Nevertheless, if you do decide to proceed with the Variable Cash ISA with Natwest, then you can get started with a minimum investment of just £1. On the flip side, the account does at least very least resemble that of an Easy Access ISA, meaning that you can make a withdrawal at any time without being penalized. Take note, if you do make a withdrawal, you won’t be able to replace it in the same year if it means you have already consumed your annual ISA allowance.

If you don’t like the uncertainties that come with a Variable Cash ISA, then you might want to consider the Fixed Cash ISA available at Natwest. Interestingly, the top-tier rate available on the Fixed Cash ISA is actually higher than that of Variable ISA – which offers frictionless withdrawals. The reason that this is unusual is that you usually need to pay a premier for the ability to make fee-free withdrawals. However, this isn’t the case with Natwest.

With that being said, the Natwest Fixed Cash ISA pays a top rate of 0.90%. In order to get this rate, you will need to lock your money up for a period of two years, and be happy to invest at least £25,000. If you’re fine with the lock-up period, but you don’t quite have the required £25,000 investment, then you’ll get a slightly lower rate of 0.70% AER. Alternatively, if you only want to lock your money away for 1 year, then an investment of at least £1,000 will get you 0.65%. You can get this up to 0.70% AER if you lock at least £25,000 up for the 1 year period.

It is important to note that – as is the case with the vast majority of Fixed Cash ISAs in the space, you will need to make some considerations regarding withdrawal restrictions. At the time of writing, Natwest notes that you can make withdrawals until December 6th 2019. After that, you will need to see the 1/2 year term out in its entirety. If you really do need to access your cash before the lock-up period concludes, you will need to close your account. In doing so, you’ll be charged 90 days’ worth of interest.

If you are in the process of buying your first home, or you’re simply looking to put some cash away to help pay for a deposit, then we would strongly recommend checking out the Help to Buy ISA being offered by Natwest. First and foremost – and as is the case with all Help to Buy ISAs, the UK government will match your deposits by an additional 25%. For example, if you deposit £100, the government will add £25 on top.

Take note, the maximum amount that you can get from the government top-up is £3,000, which amounts to savings of £12,000. Nevertheless, on top of the 25% contribution, you have the chance to earn an additional 2.50% AER per year via Natwest. When you factor in the tax requirements on your government top-up this amounts to a tax-free income of 2.47%. You will have the option of injecting up to £1,200 within the first month of opening the account with Natwest, and then you will be capped at £200 per thereon.

It is also important to note that the 2.50% AER offer is subject to change, not least because the rate is variable. In order to be eligible, you will need to be aged at least 16 years old, not have previously owned a property, and be resident for UK tax purposes. As you will be capped at £200 per month, you do have the option of putting your remaining annual ISA allowance into a different ISA. However, if you to proceed with the Natwest Help to Buy ISA, then the ISA needs to be with Natwest.

If you don’t like the sound of the super low interest rates that come with a Cash ISA, or you’re simply not in the market for a Help to Buy ISA, then the final option available to you is the Natwest Stocks and Shares ISA. If you’re a seasoned saver, then you’ll probably know that most Stocks and Shares ISAs are largely the same. As we often noted, they are mere ‘shopping baskets’ that allow you to store your stocks and shares investments. In doing so, you will be able to shield the tax liable on capital gains up to the first £20,000 per year.

So is there is anything notable about the Stocks and Shares ISA being offered by Natwest? No, not really. You will have the option of choosing your own investments or allowing an experienced fund manager to assist, which is industry standard. You will need to invest at least £50 to get started, and you will need to make your DIY investments via the Natwest trading portfolio.

The only stand-out offering that comes with the Natwest Stocks and Shares ISA is that you get to pick your risk levels. Ranging from 1-5, this will determine the types of assets that make up your stocks and shares portfolio. You should also make some considerations regarding fees. You will need to pay up to 0.60% a year in maintenance costs (which is even more expensive than Hargreaves Lansdown), as well as transactions fee of up to 0.07%.