New cash Isa tracks the base rate – but is it worth going for?

As savings rates fall, one new cash Isa promises to stay competitive by tracking the Bank of England base rate.

Investment and savings platform Hargreaves Lansdown has launched an instant-access Isa paying 3.45% AER. It’s one of only a handful of accounts that set their rate in this way.

So how does the deal measure up to the competition? Here Which? takes a closer look – and shares four ways to make the most of your £20,000 Isa allowance. 

What does the new account offer?

Unlike most instant-access Isas, this one tracks the Bank of England base rate – and currently pays 3.45% AER.

As with all Isas, you can save up to £20,000 per tax year, tax-free. The account’s key selling point is that the rate will never be more than 0.65 percentage points below the base rate, which currently stands at 4%.  

This matters because banks often respond to rate cuts by lowering interest on variable accounts like instant-access Isas – sometimes without warning. By linking the Isa rate to the base rate, this account aims to offer greater consistency.

The Isa is available through Hargreaves Lansdown’s Active Savings platform, with a minimum deposit of just £1 and no restrictions on withdrawals. Savings are held with partner bank Shawbrook and protected up to £85,000 by the Financial Services Compensation Scheme (FSCS).

While Hargreaves Lansdown already works with a range of banks on its platform, this is the first time it has launched a cash Isa under its own name.

•  Find out more: best cash Isa rates 2025

Is it worth opening?

The savings market is notoriously volatile and instant-access cash Isa rates have plunged over the past year, falling from an average 3.29% AER in September 2024 to just 2.82% this month.

Hargreaves Lansdown is positioning its new own-brand Isa as a stable option for savers who want reassurance their rate won’t plummet overnight. But is it the right choice?

Here are some reasons it might appeal – and what to watch out for.

More predictable returns 

The main advantage of opening a savings account that tracks the base rate is that it removes the uncertainty of standard variable-rate accounts, which can see interest change at any time. 

In a nutshell, it means deals such as Hargreaves Lansdown's will rise with the base rate. The flipside, of course, is that it will also go down if the BoE chooses to make cuts. 

The Bank of England held the base rate at 4% in its most recent decision on 18 September 2025. However, forecasters expect one more cut this year – most likely in December.

• Find out more: what's happening to the base rate?

It can beat the high street

Compared to the UK’s major high street banks, Hargreaves Lansdown’s rate looks competitive.

The average instant-access Isa from Barclays, HSBC, Lloyds and NatWest pays just 1.68% AER. Only Lloyds stands out with a top rate of 3%, which is still above the market average of 2.82%.

So while this Isa doesn’t lead the field, it offers a much better return than you’d get from many high street names.

Other providers offer higher rates

Hargreaves Lansdown isn't the only provider offering a base rate tracker cash Isa. Family Building Society offers the best deal, paying a much higher 4.3% AER. Several others are also paying well above 4%.

This table shows the best restriction-free instant-access cash Isa rates, excluding those with opening restrictions and withdrawal limits. Results are ordered by term:

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Hargreaves Lansdown's cash Isa rate trails behind rival deals. Its rate is almost one percentage point less than the market-leaders.

It also can't beat the current inflation figure of 3.8%, meaning your money will effectively lose over time. 

Are savings platforms worth using?

Hargreaves Lansdown is not a bank – it’s an investment and savings platform. Its Active Savings service gives users access to a range of savings accounts from different partner banks, including its own-brand Isa.

Savings platforms can be a convenient way to manage your money in one place. Once registered, you can open and switch between multiple accounts through a single login, without having to fill out a new application each time.

Some deals available on savings platforms are exclusive, and some platforms will alert you when a better rate becomes available.

Hargreaves Lansdown’s platform is free to use, but others may charge a fee. This is sometimes taken as a cut of the interest rate before it’s displayed, or deducted as a percentage of your balance.

So while savings platforms can offer convenience and competitive rates, it’s worth checking how they work – and whether you could earn more by going direct.

• Find out more: what is a savings platform?

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4 ways to maximise cash Isa savings

Whether you're a current Isa saver or newbie, there are a number of ways you can make the most of your £20,000 annual tax-free allowance:

1. Make the most of Isa season

The end of the tax year – and the start of a new one – often prompts providers to launch competitive Isa deals. Look out for better rates between February and April.

The £20,000 Isa allowance resets every year on 6 April. If you have the funds, using it early can give your money more time to grow.

Most people don’t have £20,000 to deposit in one go, so starting early also lets you spread your contributions throughout the year – making it easier to budget and more likely you'll use the full allowance.

2. Consider other taxes

While opening a cash Isa will help shield your savings from income tax, a stocks and shares Isa can help you sidestep paying capital gains tax (CGT) on your investments. 

Plus, any income such as interest or dividends will also be free from tax.

• Find out more: best stocks and shares Isa rates

3. Compound any interest

Compound interest is when your earned interest is added to your balance – helping you earn even more over time.

The sooner you start saving, the longer your money has to benefit from compounding. So don’t wait around for better rates if you’ve got money ready to save now.

4. Mix and match

You can open more than one Isa of the same type as long as you stay within the £20,000 allowance. That means you can split your savings – for example, putting some in a fixed-term Isa and some in an instant-access one for flexibility.

If you don’t need access to the money for at least five years, a stocks and shares Isa may offer better long-term returns.

If you're worried about putting all your eggs in one basket, you could take advantage of rules that allow you to open multiple Isa accounts of the same type.

• Find out more: best savings rates 2025