Post Office Online ISA

The Post Office Online ISA is a cash ISA you open and run entirely over the internet. It is not one account but a wrapper that can hold more than one product: an easy access option you can take money out of whenever you like, and fixed rate options where the money is locked for a set term.

It is provided by OneFamily, and savings in Post Office cash ISAs are deposited with Bank of Ireland UK, which is the deposit taker and the firm that holds the money¹. That matters for protection, and it matters for how you deal with the account: there is no branch counter and no telephone service for the Online ISA itself.

The account is for people who are comfortable managing savings online and who want tax-free interest without visiting anywhere. It is not for anyone who wants to walk into a branch to pay in, and it is not a flexible ISA, so money taken out cannot be replaced without using up allowance. The provider's own site carries today's interest rates and the minimum amounts for each product.

Easy Access or Fixed Rate: the products inside the Online ISA

The Online ISA is a container. Inside it you choose one or more products, and the two families behave very differently¹.

The easy access product lets you withdraw money whenever you need it, without penalties². There are no restrictions on the number of withdrawals you can make to your nominated account¹. The trade-off is that its rate is variable, so it can move.

The fixed rate product is for money you will not need for a set period. The rate is fixed during the term of the account, so it does not change while you are in it². Withdrawals are not permitted during the fixed term of a Fixed Rate product³. If you need the money back early, the account is closed and a Breakage Charge applies.

You can hold both kinds inside the same Online ISA, and money can be moved between products within it. Funding from another product within the Online ISA starts earning interest on the same working day that it is processed³.

The Post Office also sells cash ISAs outside this wrapper, including an Easy Access Cash ISA and a Fixed Rate Cash ISA, and those are separate accounts with their own terms⁴. The Easy Access Cash ISA, for example, can be opened in a branch, by post or by phone, which the Online ISA cannot⁶.

How interest is calculated and paid

Interest on the easy access product is annual, calculated daily and paid on 20 March¹. The fixed rate product pays annual interest, calculated daily, on the anniversary of the account opening date¹. The same daily calculation, paid annually in March, applies to the Post Office Easy Access Cash ISA⁶.

The daily calculation method is standard across the market: interest accrues on the balance in the account at the end of each day at the relevant gross rate⁸. In practice this means the timing of a deposit or withdrawal during the month changes what you earn, and money moved in late in the day starts from the next day.

Because the easy access rate is variable, the amount you earn can change during the year even though the interest is only paid once. The fixed rate product does not work that way: the rate is set for the term².

If you want to see what a given balance would produce at today's rates, the provider publishes a savings calculator and its product pages carry the current figures⁹. This page does not quote them, because they change.

Who can open a Post Office Online ISA

The eligibility rules are short. You must be 18 or over, a UK resident and resident in the UK for tax purposes, which does not include the Channel Islands or the Isle of Man³. You must hold a UK bank or building society account in your name, either sole or joint, so there is somewhere to pay money in from and take it out to³.

You must not already hold an Online ISA with the Post Office². If you do, you cannot open a second one; the route to a different product is to switch within the existing account.

The account is opened in your own name. ISAs cannot be held jointly, so a couple each needs their own account and each has their own £20,000 allowance¹. The allowance resets every 6 April and unused allowance cannot be carried into the next tax year¹⁰.

If you are opening an ISA for the first time, the wider rules on who can open an ISA cover residency, age and the position of people who are not UK residents.

Applying and managing the account online only

You can only apply online, and paper or telephone applications are not accepted³. The same is true of the easy access product: you can only apply online². Once open, you can only manage the account online, and you cannot access your Online ISA in a branch or by telephone³.

That is a real constraint, not a technicality. If you want to switch to another Post Office product, the provider asks you to do that in a Post Office branch². So the account is online-only for day-to-day use, with one branch errand if you want to move to a different Post Office product.

Identity is confirmed by electronic checks as part of the application, and further identification may be requested by secure message, including for anti-money laundering compliance². If documents are needed, acceptable forms include a current valid signed passport or EU national identity card, a firearms certificate, an Electoral ID card (Northern Ireland only), a current full old-style UK driving licence, a current UK or EU photo card driving licence, and correspondence from the Department for Work and Pensions or a benefits agency dated within the last six months³. A relative cannot certify your identification³.

This online-only model is common but not universal. Some providers let you open an ISA in a branch, by post or online, and some online accounts can only be opened on the provider's website and not in a branch at all¹¹. If branch access matters to you, it is worth checking before you apply rather than after.

Withdrawals and early closure charges

On the easy access product there is no charge to take money out, and no limit on how many withdrawals you make to your nominated account¹. The minimum you can withdraw from any product is £10, or the value of that product, whichever is less¹.

On the fixed rate product, withdrawals are not permitted during the fixed term³. If you close it early, a Breakage Charge applies, worked out as a loss of interest: 90 days loss of interest on a 1 year term, and 180 days loss of interest on a 2 year term¹. That charge comes out of the interest you would have earned, so in a low-interest period it can eat into the capital you get back.

There is one escape route. If you already hold an Online ISA and open a Fixed Rate product inside it, you can ask to close that product within 14 days and the Breakage Charge is waived¹.

Across the wider market, early exit penalties on fixed rate cash ISAs typically range between 90 and 365 days loss of interest, so the Post Office's 90 and 180 day charges sit inside the normal range rather than at the top of it¹⁴. Fixed rate accounts generally may charge an interest penalty if you withdraw or close before the fixed period ends, and in some cases you may have to close the account to get the money out early¹⁴.

Transferring an ISA in or out: full transfers only

You can transfer an existing ISA into the Online ISA, and you can transfer the Online ISA out to another provider. The restriction is that only full transfers are allowed: partial transfers are not permitted, and you cannot transfer individual products held inside your Online ISA¹.

You can open the Online ISA as a new cash ISA for the tax year, which runs from 6 April to 5 April, or transfer funds in from an existing cash ISA. A stocks and shares ISA can also be transferred in, and its value becomes cash ISA funds once it arrives².

Transferring funds from a previous tax year's ISA does not affect your ISA limit for this tax year³. That is the general rule across ISAs: moving old money between providers is not a new subscription, so it does not use allowance¹⁰.

When interest starts depends on where the money is coming from³:

To transfer out, you contact the new provider, who arranges it⁷. The Online ISA can be transferred in full to another ISA at any time, with a Breakage Charge applied to any Fixed Rate product still inside its term¹.

Not every provider works this way. Some accept both partial and full transfers in, and some allow you to transfer all or part of your money out at any time¹⁶. If you expect to move part of your savings later, that difference matters. The general mechanics are set out in how to transfer an ISA, and the specific question of allowance is covered in does transferring an ISA use my allowance.

Complaints and how to escalate them

Start with the provider. If your complaint needs significant investigation, the provider says an update will be provided within four weeks³.

If you are not satisfied with the final response, the next step for a savings product is the Financial Ombudsman Service, which looks at complaints about financial firms free of charge to the consumer. Complaints about how a firm has handled your personal information go to the Information Commissioner's Office instead, which takes complaints online¹⁹.

Where a firm has failed and you are unhappy about how a claim was handled, the Financial Services Compensation Scheme has its own complaints route: you can escalate your complaint to its independent investigator if you are still unhappy about claim handling or service, though not about the decision outcome itself²⁰.

If a complaint relates to your credit file rather than the savings account, the route is a formal complaint to the credit reference agency and then escalation to the Financial Ombudsman Service if it is unresolved²¹. For complaints about mobile phone contracts, an unsatisfactory final response or a complaint unresolved within six weeks can go to Ombudsman Services: Communications or CISAS, or to the Financial Ombudsman Service for handset agreements²². Other schemes have their own stages: the Insolvency Service's complaints gateway, for example, works in three stages²³, and benefit decisions have a separate escalation route to the Independent Case Examiner²⁴.

The practical point is that the ombudsman is free, independent and does not require a lawyer, and it is the route that exists precisely for the case where a firm's own answer does not satisfy you. More on the process is in complaining about an ISA provider.

Where your savings are held and how they are protected

Savings in Post Office cash ISAs are deposited with Bank of Ireland UK, which is the deposit taker¹. The account is provided by OneFamily¹. So the firm you deal with day to day and the firm holding the money are not the same, and the protection follows the deposit taker.

That has a practical consequence for the compensation limit that the Financial Services Compensation Scheme applies to deposits. Money held with Bank of Ireland UK counts towards the same limit as any other money you hold with Bank of Ireland UK, so if you already have savings there, the combined total is what is protected, not each account separately.

There is a specific gap to know about. Deposits made at a Post Office branch, including by cheque, are not initially protected by the FSCS in the event of the failure of Post Office Limited, until that deposit is transferred by Post Office Limited to Bank of Ireland UK³. For the Online ISA this is unlikely to arise, because you cannot pay in at a branch, but it applies to Post Office cash ISAs generally.

The wider framework, including how the limit works and what happens when a firm fails, is covered in how your ISA is protected.

Cancelling after you open it

You can cancel your entire Online ISA within 14 days from the date you opened the account, and you will receive a full refund of any deposits made plus tax-free interest³. The account and any products you have opened within it are closed³.

You cannot cancel individual products you have opened within your Online ISA³. So if you have opened both an easy access product and a fixed rate product, the 14 day right applies to the whole thing, not to one part of it.

There is a separate 14 day right on a Fixed Rate product opened inside an existing Online ISA, where the Breakage Charge is waived if you close it in that window¹. That is the route if you already hold an Online ISA and change your mind about a fixed rate term you have just started.

The Post Office Easy Access Cash ISA has its own 14 day cancellation right, exercised by writing to the provider⁶. The general rules on cooling-off periods, including how they interact with transfers, are in cancelling an ISA.