Savings platform Flagstone launches money Isa to rival Hargreaves Lansdown: Is it a very good deal?

Products featured in this article are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.

The savings platform Flagstone has launched a cash Isa, giving savers more choice over how to make the most of their money.

The new account is set to compete with Hargreaves Lansdown’s cash Isa*.

You can manage multiple savings accounts through a savings platform. With a host of options available through one provider, they aim to make it easier for you to compare accounts and switch when better rates become available.

But it’s uncommon for savings platforms to offer tax-free accounts, with most providing just regular savings accounts or fixed-rate bonds.

Hargreaves Lansdown is the only other major provider to do so.

With Flagstone saying it’s setting a ‘new standard’ for flexible tax-free saving, how does its cash Isa work – and how do the two major options compare? 

Stand off: Flagstone’s cash Isa goes up against a similar product from Hargreaves Lansdown

How does Flagstone’s cash Isa work?

Savings platforms let you manage what’s essentially a savings portfolio from one account, and spread your funds across several accounts.

You can monitor your money in one place and move it within the platform itself when you want to switch.

It’s less common for savings platforms to offer cash Isas, with both Hargreaves Lansdown and Flagstone being the two major providers to do so.

Cash Isas must stay separate from other accounts, so you’ll probably end up with two accounts on the savings platform – one for normal savings accounts with no tax-free wrapper, the other for cash Isas.

The benefits of the cash Isa element remain the same. You can compare options quickly then easily spread your money and switch between them.

Flagstone only offers easy-access cash Isas currently, while Hargreaves Lansdown also has fixed-rate Isas – though fixes still need to end before you can move your money between accounts.

How do the two providers compare?

Flagstone’s cash Isa is initially bare bones compared with Hargreaves Lansdown’s.

The big catch is on what matters most – the rate.

Flagstone’s best rate is 3.6 per cent variable, on an easy-access Isa through LHV.

Hargreaves Lansdown is currently offering 4.3 per cent variable*, on its own easy-access Isa provided in partnership with Shawbrook Bank.

Flagstone also only has six accounts available, which are all easy-access options.

But it’s still early days for the platform, which says it will have more easy-access options to choose from by 5 April with fixed-rate accounts coming later in the year.

Hargreaves Lansdown has nearly 30 cash Isa accounts available, covering both easy-access and fixed-rate deals.

On the other hand, Flagstone does compare well on flexibility.

It’s possible to transfer Isas directly to Flagstone, while Hargreaves Lansdown has a quirk that requires you to transfer to its stocks and shares Isa first before moving money to the cash counterpart.

Flagstone’s Isa is also flexible, meaning you can withdraw money in the same tax year and replace it without affecting your Isa allowance.

At Hargreaves Lansdown, any withdrawals reduce your allowance.

Hargreaves Lansdown does win on the low £1 minimum deposit – Flagstone is asking for a large £10,000 to get started.

Read our Hargreaves Lansdown review to find out how it performs as an investment platform. 

Is a savings platform worth it?

Whether you plump for a savings platform like Flagstone or Hargreaves Lansdown at all depends on whether you like the convenience of managing multiple cash accounts on one platform, or whether you’re happy to keep on top of accounts directly with providers.

You can get higher rates directly through Prosper (4.5 per cent)*, Trading 212 (4.54 per cent)* and Etoro (4.59 per cent)*, although keep in mind these include 12-month boosts so your rate will drop after the year.