Compare First Direct ISAs

First Direct ISA

Who are First Direct?

First Direct are a banking division of HSBC providing internet and telephone retail banking.

Headquartered in Leeds, First Direct specialise in offering personal finance products to its retail customers, including: credit cards, loans, savings accounts, mortgages, and stockbroking accounts.

Among these products are First Direct’s ISA accounts that are available as Cash ISAs and Stocks and Shares ISAs.

What is an ISA account?

An ISA account is a tax-free savings account that you can invest up to £20,000 into per tax year.

While standard savings accounts are subject to capital gains tax and income tax, ISA account investments are completely sheltered from these taxes.

There are two main types of ISA accounts, and First Direct offer both of them:

1. Cash ISAs
2. Stocks and Shares ISAs

What is the difference between a Cash ISA and a Stocks and Shares ISA?

Cash ISAs cannot go down in value, and they provide investors with fixed or variable rates of interest. Typically, the shorter the length of term for fixed-interest ISAs, the lower interest rates you’ll get.

Variable interest Cash ISAs usually offer the lowest rates, but you have great flexibility as to when you can access your money and you usually won’t be charged for doing so.

Stocks and Shares ISAs allow you to invest directly in the stock market within the tax-free wrapper of an ISA. Stocks and Shares can go both up and down in value so they are higher risk investments; however, their growth potential is much higher compared to cash savings.

What type of Cash ISAs do First Direct provide?

First Direct offer a variable-rate, instant access Cash ISA, meaning you have the flexibility of withdrawing whenever you like, free of charge.

The interest rates are lower compared to fixed-rate Cash ISAs, but they require you to hold your investments for a fixed term between 1 and 5 years or you’ll be charged for withdrawing.

As it’s a variable rate ISA, the interest rates are not guaranteed like a fixed rate ISA is, so you could earn more or less than the quoted interest rate.

What type of Stocks and Shares ISA do First Direct provide?

First Direct’s Stocks and Shares ISA is specifically a Sharedealing ISA that allows you to buy and sell shares on the stock market and hold them an ISA wrapper.

Unlike some other Stocks and Shares ISA platforms, First Direct’s Sharedealing ISA cannot hold funds like Unit Trusts and OEICs as these are not traded on a live stock exchange.

Therefore, here are the top 3 types of stocks held in a First Direct Sharedealing ISA:

• Shares – a holding in one individual company
• Investment Trusts – a holding in an investment company that invests client money within a specific market or sector, like in FTSE 100 companies, for example
• Exchange Traded Funds (ETFs) – a holding in a fund that tracks a certain market or stock index by investing in the underlying companies and aiming to mirror its performance

What are the charges for a First Direct ISA?

First Direct Cash ISAs:

First Direct’s variable rate Cash ISAs are free of charge.

First Direct Stocks and Shares ISAs:

There is technically no ongoing charge for a First Direct Stocks and Shares ISA; however, you must have a First Direct Sharedealing account to open one, and this costs £10.50 per quarter which totals £42 per year.

They also charge for share dealing:

• £10.50 per online trade for the first 9 trades per quarter, and then £7.95 after this
• £25 per telephone deal

How do I open a First Direct ISA?

You can open a First Direct ISA online via their online platform.

To open a Share Dealing ISA you will first need to open a standard Share Dealing account, which you can also do online.

For a Cash ISA, you can just register for the ISA directly without needing a Share Dealing account.

You’ll need to provide some basic personal information to create an account including your National Insurance Number, and you’ll need to make a contribution to start investing.

Can I transfer my existing ISAs to a First Direct ISA?

Yes, you can transfer any previous Cash or Stocks and Shares ISAs into a First Direct ISA.

The great thing about ISA transfers is that they don’t count towards your annual ISA allowance, so you can transfer as many ISAs in one year while also adding up to £20,000 of new money.

To transfer your ISA, you’ll need to complete an ISA transfer form with First Direct. They will then request your ISA transfer for you and see it through to completion.

Make sure to check with your existing provider whether you will be charged for transferring so that you know what to expect.