When you’re looking for the right place to grow your savings, you’ll come across plenty of options—from easy access accounts to different types of ISAs.
There are lots of considerations to make when you're trying to figure out which one suits you best.
That’s where limited access ISAs come in.
They offer a middle ground—allowing you to earn interest while encouraging you to minimise withdrawals to encourage saving.
In this blog, we’ll break down what they are, how they work, and how they compare to other savings accounts, so you can decide if they’re the right fit for you.
Firstly, let’s define “limited access” in the context of saving.
The term is quite self-explanatory. It means that account holders will typically have limitations placed on how frequently they can withdraw funds that are kept within an account, compared to more open accounts like easy access savings.
Although they have restrictions, limited access savings accounts tend to have a higher interest rate than more traditional access accounts, provided you don’t exceed the withdrawal limit. In turn, that means they can also make your savings work harder.
With Aldermore's limited access savings accounts, you can technically make as many withdrawals as you like on the account, however to earn the higher rate of interest, you must not exceed the stated number of withdrawals.
The exact terms of these withdrawals are determined by your provider. A common withdrawal penalty, which is offered in our new Single Access and Double Access Reward ISAs, is a reduction in savings interest rate when the account holder exceeds the agreed number of withdrawals for a given period. Single access accounts allow one withdrawal without penalty, while double access accounts allow two. Other providers may offer triple access products.
We often see limited access ISAs and savings accounts compared with their easy access ISA counterparts. While both operate similarly in providing interest based on how much money is saved within them, their main point of difference comes around access restrictions.
Depending on the product’s terms, you can generally withdraw funds from easy access accounts at any time with no delay. This grants more freedom than a limited access/reward ISA, albeit with a potential reduction in overall interest rate.
For the most part, limited access ISAs (Reward ISAs) and limited access savings accounts, like our double access savings, are very similar. They both encourage you to limit how often you withdraw money from them and they both have variable interest rates. The main difference revolves around the tax efficiency of the ISA compared to the standard savings account.
With these, users can max out their £20,000 yearly ISA allowance, with any interest earned being completely tax free. With double access savings, however, tax is liable to be paid depending on how much income tax the account holder pays.
You can learn more about the benefits of our reward ISAs here: The benefits of Reward ISAs
Our goal is to help you achieve more with your finances. Whether that’s through flexible accounts that offer frequent withdrawals, or tax-efficient ISAs that reward you for withdrawing less, we’ve got personal savings accounts for most scenarios.
Get more from your ISA with the Aldermore Reward Cash ISA. Apply today.