No fee to pay for first 12 months.
ISA season is upon us and the banks and investment houses are gearing up to start luring us in. Fidelity has been one of the first to set out its stall with an offer of no service fee for the first year for new customers and a cashback deal for existing customers.
New customers
The offer to new Fidelity customers is simple. Open an account and deposit a minimum of £2,400 or set up a monthly savings plan of £200 or more between 7th February and 5th April and you won’t pay a service fee for the first 12 months.
Fidelity Personal Investing says that this will make it the cheapest place to buy an ISA this tax year. If you invest your full £15,000 ISA allowance you'll save £52.50 as a result.
But, it isn’t as straightforward as that. While you won’t pay a service fee, there are other charges you’ll have to cough up so you need to look at more than just the headlines.
Invest your ISA with Fidelity and you’ll still pay £9 per share trade, plus any charges associated with the funds you invest in.
Its main competitors charge more for share trading and still have admin fees on top. For example, Hargreaves Lansdown charges an annual fee of 0.45% on the first £250,000 invested plus £11.95 per share trade.
[SPOTLIGHT]Axa is also offering to waive its admin fee for the first year for new investors, but it only allows investment in funds not shares and doesn’t offer as broad a range of funds as Fidelity.
Fidelity's offer is a good deal. It doesn’t charge for fund investing and offers some of the cheapest trading costs on shares too, so this could work out as a cheap way to invest your ISA allowance. Just be aware that after 12 months the service fee will kick in, so you’ll need to reassess the situation then.
If you are tempted by this offer I’d sit tight for now. It’s very early in ISA season, so I’d hold on to see if other investment platforms come out with deals to undercut Fidelity before the end of the tax year.
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Existing Customers
If you already hold an ISA with Fidelity, you can benefit from some cashback if you transfer other ISAs over. To qualify for the cashback you have to transfer a lot of money, though. You get:
- £50 for transfers between £25,000 and £49,999
- £100 for transfers between £50,000 and £99,999
- £250 for transfers between £100,000 and £199,999
- £500 for transfers between £200,000 and £299,999
- £1,000 for transfers over £300,000
To get the cashback you have to transfer your ISA between 14th February and 30th April.
Existing customers will still be paying Fidelity’s service fee of 0.35% on portfolios worth under £250,000, 0.2% on holdings worth £250,000-£1 million and nothing on holdings over £1m.
So, your cashback isn’t going to cancel out the service charge unless your holdings are worth over £250,000 and you transfer more than £200,000. So, on a purely cost basis you might be better off moving your money to Axa, which is waiving its service charge to new customers, if you are only wanting to invest in funds and can put up with a smaller selection to choose from.
The cashback offer for existing customers isn’t that great given you have to transfer a large amount to qualify and you’ll still be paying a service charge on what you transfer.
As usual, the better offer has been reserved for new customers. So if you are already a Fidelity customer I’d keep an eye out for tempting offers from rivals as ISA season gets going.
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