Compare Tesco ISAs

Who are Tesco Bank?

Originally founded as Tesco Personal Finance in 1997, Tesco Bank offer various financial services to its banking customers including credit cards, bank accounts, loans, savings accounts and insurance policies.

A unique selling point of Tesco’s financial services is the crossover to their supermarket services via their Clubcard points, which accumulate when you use any of their financial products.

ISA accounts are one type of savings account that Tesco Bank provide to retail customers, and they exclusively offer Cash ISAs and not Stocks and Shares ISAs.

What is an ISA account?

Investing in an ISA is a way to protect your savings and investments from income and capital gains tax.

In a regular savings account, you have to pay tax on:

• Interest you earn on your cash savings
• Dividends you receive from stock investments
• Capital gains you make on stock investments when you sell them for a profit

If you invest in an ISA, you are never required to pay any taxes on the above earnings, even when you come to withdraw your funds.

HMRC allows UK residents to invest up to £20,000 into ISA accounts in the current tax year, and this allowance refreshes each year so you can keep topping up.

What type of ISA is a Tesco ISA?

Tesco do not currently provide a Stocks and Shares ISA, but they do offer two types of Cash ISA products: Fixed Rate ISAs and Variable Rate ISAs (otherwise known as instant-access ISAs).

What’s the difference between a fixed-rate ISA and a variable-rate ISA?

Here’s a checklist for each type of Cash ISA to give you an idea of the pros and cons of each:

Fixed-Rate ISAs

1. Fixed-rate ISAs generate a guaranteed rate of interest on your savings
2. You are locked into a specific term length, from 1 to 5 years
3. If you withdraw or close your account during your term, you are charged or will lose a portion of your interest
4. The longer your fixed ISA term, the higher interest rates you’ll receive

Instant-Access ISAs

1. Variable-rate ISAs generate a rate of interest that can fluctuate
2. Variable interest rates are usually lower than fixed rates
3. You can usually make unlimited withdrawals free of charge with no notice period

How do I open a Tesco Bank ISA?

• You must have a UK bank account in your name that you can make payments from and receive withdrawals to
• You must be a UK resident, or a Crown employee serving overseas, or be married to or in a civil partnership with a Crown employee
• You must be over the age of 18

If you are eligible, then you can open a Tesco ISA online via their banking website, and the process only takes a matter of minutes.

Can I transfer my ISA into a Tesco Bank ISA?

You can transfer any existing ISAs you hold with other providers to a new or existing Tesco Bank ISA.

To do so, you’ll need to complete an ISA transfer form with Tesco Bank and submit your transfer request to them directly.

Tesco Bank will then liaise with your previous ISA provider to transfer your account to them.

The great thing about ISA transfers is that they don’t count towards your annual ISA allowance.

This means that you can transfer as many ISAs as you like into a new ISA in the same tax year, without having to worry about the £20,000 limit for contributions.

However, make sure you complete your ISA transfer with an ISA transfer form and let your new provider carry out the transfer.

If you simply withdraw your old ISA to your bank account and then add it to a new ISA, your money will lose its ISA status. When you then contribute it back in, it will deduct from your annual allowance.

Also, make sure to check with your existing ISA provider to see if there are any penalties or charges for transferring away.

What ISA rules do I need to be aware of?

Before investing in an ISA, it’s important to know some of the key restrictions and limitations of the accounts.

We’ve summarised the most important rules to keep in mind:

• The annual ISA allowance is £20,000 in the current tax year - don’t contribute over this limit.
• Your allowance can be shared between Cash ISAs and Stocks and Shares ISAs, so you can share your contributions between both types if you wish.
• You're not allowed to contribute to more than one Cash ISA in the same tax year, or more than one Stocks and Shares ISA in the same year.
• You can, however, open multiple Cash ISAs with different providers across more than one tax year, and the same goes for Stocks and Shares ISAs.
• You can transfer existing ISAs to new ISA accounts without it counting towards your ISA allowance.
• Your ISA allowance does not roll over – use it or lose it.
• The ISA allowance refreshes on 6th April in line with the tax year dates.