Gareth Hoyle · Founder & Editor
Reviewed May 2026. Independent researcher, not a financial adviser. About Gareth
The crucial difference in one line: a cash ISA is savings (your money is protected and the rate is known) while a peer-to-peer ISA is an investment where your capital is genuinely at risk in exchange for a higher target return.
| Peer to peer ISA (IFISA) | Cash ISA | |
|---|---|---|
| What it is | Lending to borrowers via a platform | A tax-free savings account |
| Target return | Higher (often 4–8%, not guaranteed) | Lower (a set, known rate) |
| Risk to capital | High, you can lose money | Very low, capital protected |
| FSCS protection | No | Yes, up to £85,000 |
| Access to money | Can be limited / delayed | Easy access available |
| Best for | Higher income, risk understood | Safety and short-term goals |
Lean towards a peer to peer ISA if…
- · You already have emergency savings elsewhere
- · You understand and accept you could lose money
- · You want a higher target income and can lock money away
Lean towards a cash ISA if…
- · You can't afford to lose any capital
- · You'll need the money within a couple of years
- · You want FSCS protection and a known rate
The honest take
For most people, a cash ISA and a peer-to-peer ISA aren't really competitors. They do different jobs. A sensible approach is often to secure your safety-net savings in cash first, and only then consider whether a small, affordable slice in higher-risk lending makes sense. They're not either/or.
Where to look
Compare peer-to-peer providers in our IFISA comparison. For cash ISAs, the most competitive rates today often come from fintech platforms (such as Trading 212, Moneybox and Plum) as well as traditional banks and building societies. Always compare the current rate, access terms and FSCS status before opening.
Keep reading
Compare providers
Independent side-by-side comparison of UK IFISA providers: target rates, minimums, security and transfers.
Returns calculator
Illustrate how cash, stocks & shares and peer-to-peer ISA returns could differ over time. Illustrative only.
Types of ISA explained
The five main types of ISA, how each works, who they suit and how they compare.
Cash ISA vs S&S ISA
The classic decision: guaranteed-rate savings vs investing for growth. How to choose, and why not both.