Cash ISAs

In this guide we rate the ethical and environmental record of 40 banks offering Cash ISAs. 

We guide you through the jargon, explain how to identify the most ethical Cash ISAs and offer our Best Buy recommendations.

About Ethical Consumer

This is a product guide from Ethical Consumer, the UK's leading alternative consumer organisation. Since 1989 we've been researching and recording the social and environmental records of companies, and making the results available to you in a simple format.

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What to buy

What to look for when choosing a cash ISA:

  • Is it an ethical investor? Make sure that your chosen brand is clear about how it will invest your money. Keep an eye out for ethical investment policies. The sector is lucky to have two innovative organisations looking to lever the power of people’s savings for positive social and environmental change.

  • Is it a mutual? Is the organisation owned by and run for their members rather than for short-term financial gain? Savings accounts that are by mutual organisations like building societies have traditionally been a more ethical choice.

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What not to buy

What to avoid when choosing a cash ISA:

  • Is it financing climate change? Many banks have extensive investments in fossil fuels, including the most damaging ones like tar sands, ultra-deep-sea drilling, and fracking.

  • Is it funding nuclear weapons or cluster munitions? Many banks lose marks in our Arms and Military category for funding these most destructive of weapons.

  • Is the company a likely tax avoider? Secrecy and aggressive tax avoidance continues to pervade the banking sector. Avoid banks which lack robust tax policies.

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Score table

Updated live from our research database

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Brand Score(out of 20) Ratings Categories Positive Scores

Our Analysis

The distinctive thing about UK ISAs is that the interest is all tax-free. Other things that make ISAs unusual are that you can only open one type per tax year, and there is a limit to how much you can put into them each year. This annual limit has risen from £3,000 in 1999, to £20,000 where it has remained since 2017, and includes any combination of ISAs you have, including Innovative Finance ISAs and Stocks and Shares ISAs (see below).

Should I get an ISA?

If it’s the tax-free interest that’s enticing you, you may not actually need to open an ISA. Since the Personal Savings Allowance was launched in 2016, unless you are a higher-rate taxpayer or have very large savings, your interest payments in any savings account will be tax-free anyway. With low interest rates in general at the moment, you might even find a better interest rate in a normal savings account.

However, although you won’t earn much on your savings in a low-risk investment like a Cash ISA, if you do have an ethical ISA, you have a place to put money safely away, and know that it is doing good, until you need it. With large amounts of money often sitting in ISAs for many years, it really can make a big difference where you put it.

What is an ethical ISA?

You may find financial products out there being promoted as ethical ISAs, or green ISAs because they exclude investments in tobacco, alcohol, pornography, fur, armaments, and some oil investments. While these are all things we are glad to see excluded, they are often just one option offered by a provider that doesn’t maintain the same standards for all of its products.

Our Best Buy cash ISAs are from dedicated ethical providers, who not only exclude the most dodgy and damaging investments, but also are very clear about what they do proactively invest in.

It’s no surprise that the Best Buys in this guide mirror those in our guide to savings accounts. Although Charity Bank does not offer ISAs at the time of writing, it’s good to see that, alongside Triodos, the Ecology Building Society is again an option after recently re-starting their cash ISA offering. Both host multiple positive stories on their websites about projects they have funded and initiatives they are involved in. In each case, the money held in savings accounts makes this work possible.

This is in contrast to the big five high-street banking groups who have the advantage of appealing to their huge numbers of existing customers, and hold around two thirds of ISA accounts. Dig a bit deeper into what they do with their money and you may well want to avoid them or transfer to a more ethical provider.

Both of our Best Buys get a positive Company Ethos mark on our rankings table for offering an innovative alternative to the mainstream banking industry. They also get an extra Product Sustainability point for having an ethical lending policy.

Both are members of the Global Alliance for Banking on Values (GABV), a network of banking leaders from around the world committed to advancing positive change in the banking sector.

All of our Best Buys and Recommendations are protected by the FSCS (Financial Services Compensation Scheme), which means up to £85,000 (or £170,000 for joint accounts) held per firm would be repaid to the saver if a firm should fail. You should be aware that some banks or building societies are linked and therefore share one lot of £85,000 protection. You can check which ones are linked using this tool.

Mutuals

Mutually owned entities, in the form of building societies, are also a good option for ISAs. They are seen as a more ethical option due to the fact they lend mainly in the housing market and don't invest in fossil fuels and other unethical sectors.

All the mutuals featured on the table pick up an additional mark in our scoring system for Company Ethos due to their more democratic structures. You can read more about mutuals and building societies in our guide to savings accounts.

Corporate policies

Most banks do now have Corporate Social Responsibility (CSR) policies which give the impression that they are as concerned about some of these activities as you are.

However, looking at their actual investments, as we have done for the ranking table, shows that in many cases these words are little more than hot air.

As you'll see from the table, even those that get our best rating for environmental reporting don’t tend to do well in the other Environmental columns, and only the two Best Buys (Triodos and Ecology Building Society) get a Product Sustainability mark for having a particularly ethical lending policy. The Co-op Bank also get a mark for this.

Divesting your ISA

Mainstream banks use your savings as leverage to help finance companies involved in a wide array of damaging activities. This could include investments in nuclear weapons and other armaments; Arctic oil and other fossil fuels; palm oil plantations; or industrial meat farming. You can read more about the big banks and their controversial investments in our guide to current accounts.

Transferring to a more ethical ISA

It is sometimes possible to transfer a Cash ISA (or convert a Stocks and Shares ISA) from another provider if you already have one, though you should check if there is a penalty fee. You will need to check if the new provider accepts transfers – of our Best Buys, Triodos accepts transfers while Ecology does not – and ask them to maintain the tax-free status of your savings.

Ease of moving accounts

Government efforts to promote competition in the sector mean that it’s pretty easy to move your whole Cash ISA to a more ethical provider. In theory it should take no more than 15 days, but you should follow advice on how to do it without losing its tax free status. Contacting the new provider is usually the best place to start.

Types of Cash ISA

Just like savings accounts, there are several types of Cash ISAs to choose from. The practical details should also be checked, as they vary on how much you need to deposit to open one, and how restricted withdrawals are, as well as interest rates.

  • Easy Access is good if you may need to withdraw money, but probably will have lower interest.
  • Regular Savings is good if you can make a monthly deposit, and should have higher interest.
  • Notice or Fixed are good if you are able to wait to withdraw money, and should have higher interest.
  • Junior ISAs  are for savers under 18 years old. Parents or guardians can open and manage the accounts, but the money belongs to the child. Up to 16 or 18 years is a good amount of time to build up savings, and they may have higher interest rates too. The annual deposit limit is currently £9000.
  • If you are aged between 18-39, you can open a Lifetime ISA (LISA) account, which is specifically to save for a first home, or retirement. You can save up to £4,000 a year and receive a maximum bonus of £1,000 each year until you are 50. However, it does not do better than a pension, except perhaps for self-employed basic-rate taxpayers. Not many brands offer LISAs, but Paragon, Newcastle Building Society and Skipton Building Society do. Help to Buy ISAs are no longer available.

Other types of ISA

Innovative Finance ISAs

An innovative finance ISA – sometimes called an IFISA – is an ISA that contains peer-to-peer loans instead of cash in a bank or stocks and shares in companies. They were introduced in 2016 to make it easier to invest tax-free with a wider range of providers. These types of ISAs are at risk, and not protected by the FSCS.

Peer-to-peer lending matches up investors, who are willing to lend, with borrowers, who could be individuals, businesses, or property developers.

Triodos and Abundance both offer ethical IFISAs. Both have rolling options that are open until they raise a certain amount of investment. When we checked in March 2021, there were no open offers, but with Abundance you could sign up for updates. See our guide to ethical IFISAs for more details.

Stocks and shares ISAs

These investment type ISAs can be linked to ethical investment funds – see our dedicated guide. These ISAs are also at risk, and not protected by the FSCS.

Companies behind the brands

Ecology is a building society with a difference, focusing on mortgage loans to make homes more energy efficient. Its loans support community-led affordable housing as well as individual renovation projects, developing many inspiring examples of low-impact living. It also participates in various policy initiatives aiming to deliver mass retrofit of homes, and in new European criteria for green mortgages.

Since 1981, it has lent to over 3,000 projects. In 2019 90% went to residential properties including sustainable new build, renovation and conversion, and 10% went to commercial and community projects including woodlands, housing cooperatives and shared ownership. Ecology offers a Cash ISA with no notice period for withdrawals, which you can open with just £25 (variable rate 0.30% AER at March 2021).

Triodos publishes details of every organisation it lends to. You can explore on its website to see which projects it is financing near you, in the UK, and in the world, including social housing, sustainable energy, arts and culture, and fair trade. It also produces an in-depth blog on how money can have a positive impact, including its vision to reset the economy, with a resilient and inclusive recovery from the global pandemic.

Triodos offers 33-day notice Cash ISAs which you can open with just £10 (variable rate 0.20% AER at March 2021), Ethical Stocks and Shares ISAs, Innovative Finance ISAs and Junior ISAs (1.50% AER at March 2021).

Want to know more?

If you want to find out detailed information about a company and more about its ethical rating, then click on a brand name in the Score table. 

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