Last updated: 1 June 2021
What is a fixed rate ISA?
A fixed rate ISA (also known as a fixed-term rate ISA) is a savings account you open for a set period of time, usually ranging from 1 to 5 years, with a pre-agreed fixed rate of interest.
How does a fixed rate ISA work?
With a fixed rate ISA, you're given a 14-day window to add as much money as you like from when you open the account. After the window closes, your money earns tax free interest until the end of the term, when the account matures.
Currently, the government has set a £20,000 limit on the amount you can invest in ISAs for the 2021/22 tax year.
Why save in a fixed rate ISA?
The best fixed rate ISA will usually beat the rates offered by more accessible cash ISAs, and you get the guarantee of a fixed rate for a term that suits you.
How to choose the best fixed rate ISA
There are three things to consider:
Choose the highest interest rate: this will give you the best return on your tax free savings
Choose a term that suits you: filter our table to show you terms between 1 year or less, 2 years, 3 years, 4 years and 5 or more years
Choose how much to save: some require you to open with a minimum deposit, such as £500, but do not let you add any more money until the term ends
You may need to visit a branch to open your chosen fixed rate cash ISA, as not all accounts in our table are available to apply for online.
Find out more about cash ISAs here
What are the benefits of fixed-rate cash ISAs?
If you're looking to put away money for use in the future, a fixed rate isa is a great way to make your money work for you without having to pay any tax on your earnings.
Given the current historically low interest rates, which look like they may last for a while, it's worth considering a fixed-rate ISA over an easy-access cash ISA, especially if can afford to tie your money up, as the interest rates tend to be higher
Keep in mind that the tax break is an addition to the Personal Savings Allowance (PSA), which allows basic-rate taxpayers to earn £1,000 in savings interest each year without having to pay any tax on it.
Can anyone open a fixed rate ISA?
Yes, as long as you are a UK resident over the age of 16 and have not already paid into another cash ISA during the same tax year. Here is more information on opening a cash ISA.
Some fixed rate ISAs are only available to existing customers. These often come with higher interest rates compared to ISAs offered to new customers.
What if you already have a cash ISA?
If you have existing ISAs that you want to transfer into a new fixed rate cash ISA then our table can help you compare products by which ones will allow ISA transfers in.
If you have an existing fixed rate cash ISA you will have to wait till the term ends before you can transfer it without penalty.
Is your money protected in fixed rate ISA?
Most cash ISAs are protected under the Financial Services Compensation Scheme (FSCS) up to £85,000 per provider.
Those based overseas may use a foreign compensation scheme that could covers you for the equivalent of €100,000.
Find out more about compensation schemes here
