Halifax Share Dealing: Flat fees can make this a very cheap option but beware those high FX fees

• Existing Halifax customers who are happy to adopt a drip-feed strategy, who can benefit from the commission-free scheduled regular investment plan. You’d need to invest in UK shares only, however, to avoid those crippling 1.25% A foreign exchange (FX) fee is added to all trades involving foreign currencies. If you buy a stock that trades in US dollars, for example, and your home account is in GB pounds, you’ll need to pay an FX fee.FX fees on international shares.
• Halifax does offer a large range of A cash ISA is a type of individual savings account where you can earn tax-free interest on your saved cashCash ISAs and traditional savings accounts with some good rates of interest so it’s worth looking at Halifax if you’re a saver

I would caution against using Halifax if you plan to trade regularly either on an ad hoc basis (those £9.50 per trade dealing fees on UK assets are astronomical) or you plan to buy and sell a lot of international assets: the 1.25% FX fees could eat into your returns in a big way.

Halifax Share Dealing offers its customers access to a:

• General investment account (GIA) is an account designed to provide access to investments. You may be liable for tax on any income or capital gains earned within a general investment account but this can be a useful vehicle for anyone who has maxed out their ISA allowanceShare dealing account
• Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAStocks and shares ISA
• A self-invested personal pension (SIPP) is a type of private pension that allows you to control the specific investments that make up your pension fundSelf-Invested Personal Pension
• A cash ISA is a type of individual savings account where you can earn tax-free interest on your saved cashCash ISA
• Instant access savings account

A general investment account is best used once you’ve reached your annual tax-free allowance within an ISA. Taking that approach allows you to maximise your tax-free allowance on investment returns. Both Halifax investment ISAs are ‘flexible’ ISAs, meaning if you make a withdrawal, you can pay that money back in to the same account before the end of the tax year and it won’t be counted twice. That’s helpful if you’re wanting to save the maximum – currently £20,000 per year – across all your ISAs.

Discover our best-rated investment ISAs

Halifax offers a really good range of accounts if it’s interest on savings that you’re looking for, rather than investment returns.

Their cash ISAs and regular savings accounts offer generous interest rates, and in some cases, lead the field, as you can see from our latest analysis:

The top-rated 5.50% Halifax Regular Saver account does come with some limitations, however. You must save a minimum of £25 per month and you’re limited to a maximum of £250 per month. And it’s not easy access – you can only access your savings during the 12 month term if you close your Regular Saver account.

If you need easy access to your savings, rather than being locked in for a year, then Halifax’s rates aren’t quite as competitive:

There are plenty of options if you want to use your annual ISA allowance for savings too: 5 different cash ISAs, plus a Junior Cash ISA at present. Rates aren’t terrible, but to get the top rate you need to be an existing customer (which means having had an account for 40+ days) and there are much better rates to be had elsewhere.

(Not all of the providers below will offer a Junior Cash ISA.)

The Halifax SIPP is actually administered by AJ Bell. A few of the high street banks use AJ Bell for their SIPP and it’s a very good product, but as it’s a third party provider, you’ll be subject to third party fees. If you like the funds on offer, then going directly through AJ Bell for the SIPP, might be the better option. You’ll get a wider choice of stocks and other assets to invest in that way too.

Assets

Investment choices, if you decide to go with Halifax, stretch to around 7,000 options and include:

• • Starter fund suggestion: AJ Bell Balanced Fund
  • A choice of 2,500 other funds
  • A shortlist of 600 ETFs
  • Investment trusts
  • 4,700+ UK, US and European stocks

That’s not a bad range, but it’s not as extensive as the likes of interactive investor, Saxo Markets, or AJ Bell.

A ready-made portfolio is a pre-made collection of investments that have been put together by investment experts. They are designed to be a simple option for those who don’t want to choose individual stocks or funds for themselves.Ready-made portfolios

Halifax only offers a choice of three ready-made portfolios: One offering a low level of risk, one offering a medium level of risk and one offering medium-high risk. That’s not a great amount of choice, although they are relatively low cost and have achieved above-average returns overall.

I’m an existing Halifax banking customer. Should I just stay with Halifax?

It really does depend how much you intend to invest, and what kind of investor you are. Do you want to pick and choose your own individual stocks and funds, or choose a ready-made option? How much work and time are you prepared to put in?

If you’re a DIY investor, I’d say it’s well worth comparing what you can get elsewhere. It’s not as difficult as you might imagine to open a new account with much faster, easier onboarding processes the norm these days.

And we’ve made it easier than ever to find the options to suit your pocket and your goals.

Try our ISA calculator and find your perfect ISA match.

If it’s a trading account you want, we’ve got the best trading platforms in the UK.

And we’ve got you covered for the best SIPPs too.

Service fees

Halifax charges a flat fee of just £36 as an annual customer admin fee, which covers ISA and Share Dealing Accounts. That’s potentially a bargain, particularly if you have a large portfolio that would incur large fees from a percentage-fee provider. On a £20,000 portfolio, for example, the annual flat £36 account fee works out at a low 0.18%. And on £500,000, it’s practically nothing (0.0072%). Having said that, Vanguard, Dodl and NatWest Invest only charge 0.15% to invest, whatever your portfolio value although you won’t get to invest in shares here, just funds.

If you want to add a SIPP on, however, there’s an additional quarterly fee of £22.50 for account values of £50,000 or less, £45 for values over £50,000. This charge is paid to AJ Bell, who administer the SIPP. That third party element means that this isn’t the cheapest way to open a SIPP. Explore this page for our top recommendations for personal pensions and SIPPs.

One additional really nice touch I like about the Halifax Share Dealing account – service fees are waived altogether for 18-25 year olds. That’s a helpful reduction for those just starting out and a welcome initiative to encourage young people to get in the investing habit.

Dealing fees

This is where Halifax doesn’t do so well.

For trades on GBP assets, you’ll be charged dealing commission of £9.50 per online trade, which is definitely at the higher end of the scale. (Charles Stanley’s £10 per trade and Hargreaves Lansdown’s £11.95 are more expensive, but there are not many providers charging this much.)

There is a way to avoid the commission however, by setting up a regular trading plan. With the regular investment service, you agree to set up an automated transfer of at least £20 per month into your trading account. Doing it this way means you can avoid the dealing fees altogether and may also be a more manageable way to get started if the £500 lump sum that Halifax otherwise requires to set you up with an investment account is too much. There are other benefits to setting up a regular investment plan, too. Drip-feeding your portfolio means you may be better able to smooth out peaks and troughs in the market

If you trade international assets, then Halifax is more generous as there are no dealing fees here. HOWEVER, before you jump into US or rest of the world stocks, beware: Halifax still makes you pay. A foreign exchange (FX) fee is added to all trades involving foreign currencies. If you buy a stock that trades in US dollars, for example, and your home account is in GB pounds, you’ll need to pay an FX fee.FX fees of 1.25% are scandalously high. If you don’t believe me, take a look at this comparison:

If you want to get a sense of how much different those FX fees can make to trading costs, especially if you’re a large portfolio-holder, visit this page.

Interest on uninvested cash

Unlike most other investment platforms, Halifax doesn’t pay you interest on any uninvested cash sitting in your investment account. You could be missing out here. Here’s what other platforms are paying:

A ready-made portfolio is a pre-made collection of investments that have been put together by investment experts. They are designed to be a simple option for those who don’t want to choose individual stocks or funds for themselves.Ready-made portfolios

Fees for a ready-made solution are £3 per month plus ongoing fund fees and transactions costs that range from 0.32% for a Cautious portfolio, to 0.37% for a Progressive portfolio. That’s fair but you could also find cheaper elsewhere as this chart shows:

How Halifax compares to other high street banks

In the following three scenarios, we’ve imagined a customer has £20,000 invested in a stocks and shares ISA, in (1) US stocks, (2) UK stocks, and (3) funds, and that they trade 12 times in the space of a year.

The verdict?

Those low, flat service fees could make Halifax an exceptional bargain if you have a large portfolio. Here’s an example of what I mean:

However, if you plan to trade stocks, watch out for the exceptionally high FX and dealing fees that sting, as you can see from the below fee example:

Alongside large portfolio-holders, twhe other group who could still find this a cheap option are 18-25 year olds. With waived service fees for this age group, Halifax is an option worth considering as long as you don’t plan to buy and sell often. So, if you’re a young ‘buy and hold’ investor (and there’s a lot to be said for that approach), then it could be worth a look.

If you don’t fall into that category, there is one other possible way to make Halifax a cheap option, and that’s to invest through their regular investor plan and stick to UK assets. But that’s a rather limiting approach that won’t work for everyone.

Have a question about Halifax that we haven’t covered? Ask it here and we will get back to you as soon as possible!