1-year fixed-rate ISAsUp to 4.5%
The inside scoop on fixed-rate cash ISAs
Let us help you figure out how fixed-rate cash ISAs work, and compare the best rates - up to 4.5%.
Is my money safe?
The Financial Services Compensation Scheme (FSCS) guarantees that it will step in to compensate the first £85,000 (£170,000 for a joint account) you have saved with a UK-authorised bank, building society or credit union in the event that the business goes bust.
Compare fixed-rate cash ISAs
Table: sorted by interest rate, promoted deals first
A cash ISA can be an excellent way of shielding your savings from tax and can be especially useful when interest rates are high. Fixed-rate cash ISAs give you interest at a rate that’s locked in for a set period – usually from 1 to 5 years.
What is a fixed-rate cash ISA?
A cash ISA is a savings account in which you’ll pay no tax on interest earned. There is a maximum amount of money you can deposit into a cash ISA per tax year. For the 2024/2025 tax-year (which ends at midnight on 5 April), the maximum allowance is £20,000.
With a fixed-rate cash ISA, the interest rate is fixed for a specific time. The longer the fixed-rate period, the higher you can expect the interest rate to be. However, the trade-off is that you will pay a penalty to withdraw funds during this fixed-rate period. Plus, you usually can’t contribute additional funds after opening your account.
There are plenty of cash ISAs to choose from with fixed rates of 1, 2, 3, 4 or 5 years. Cash ISAs with longer fixed-rate periods are sometimes available but are rarer.
How does a fixed-rate cash ISA work?
You apply to open a fixed-rate cash ISA as you would any other type of savings account. Your bank will ask for various personal and financial details. You’ll need to make an initial deposit to open the account, although this could be as little as £1 in some cases.
On 6 April 2024, the ISA rules changed so you can now pay into multiple cash ISAs in one tax year. In the past, you could only deposit “new” funds into one cash ISA per year.
You can also transfer money between ISAs without using your allowance. But when transferring, make sure you follow the procedure laid out by your old and new cash ISA provider. Simply withdrawing from the old account and depositing it into the new one will mean you’ll lose the tax-free status on the amount that’s already saved.
Interest will be paid monthly or annually, depending on your choice of provider. Your provider will enforce limits on deposits and withdrawals just as it would with any other account.
How can you add money to a fixed-rate ISA?
You can fund a new fixed-rate ISA by depositing funds from another account or paying cash at your local bank branch (if you’re saving with a high street bank).
You are usually given a window of time to deposit new money into the account. Once that time has passed, most fixed-rate cash ISAs won’t allow you to top-up your account later.
Fixed-rate ISA providers will also normally accept transfers from an existing cash ISA. If you decide to move money from an existing ISA, make sure you follow the ISA transfer process so you don’t lose your ISA allowance used in previous years.
How to find the best fixed-rate cash ISA
First, you’ll need to decide how long you’re happy to tie up your funds. Remember, you’re not permitted to withdraw funds during the fixed-rate period.
Once you’ve decided on a timeline, the most important factor to consider is the interest rate paid on your balance. You can find the best interest rate for your desired fixed-rate period using a price comparison website.
Another factor you might want to consider is the provider’s policy on early withdrawals. That said, aim never to have to withdraw your funds.
If you’re not at risk of exceeding your personal savings allowance, then you might be better off with a non-ISA account, which tend to pay better rates.”
Pros and cons of a fixed-rate cash ISA
Pros
- You’ll pay no tax on interest earned in these accounts.
- Higher rates are available with longer fixed-rate periods.
- If savings interest rates go down, yours won’t.
- You can pay into multiple cash ISAs each year.
Cons
- There are annual limits for how much you can deposit.
- Early withdrawals are not permitted (without forfeiting interest).
- If savings interest rates go up, yours won’t.
- Cash ISAs often pay lower interest rates than non-ISA savings accounts.
Which are the best fixed-rate cash ISAs at the moment?
Our best fixed-rate cash ISAs are the highest interest rates available. To get the latest rates, we use Moneyfacts data, which covers nearly the full market of savings products and is checked and updated daily. We don’t include accounts from private banks.
All the cash ISAs in our list have savings protection – for most, this is the Financial Services Compensation Scheme (FSCS). Other schemes include NS&I, which is 100% backed by HM Treasury, and the Gibraltar Deposit Guarantee Scheme.
- Hampshire Trust Bank – 1 Year Online ISA Fixed Saver (Issue 35) - 4.5%
- Shawbrook Bank – 1 Year Fixed Rate Cash ISA Bond Issue 111 - 4.49%
- Castle Trust Bank – Fixed Rate e-Cash ISA - 4.49%
- Cynergy Bank – Loyalty Fixed Rate Cash ISA - 4.49%
- Cynergy Bank – Fixed Rate Cash ISA - 4.48%
Fixed-rate ISA or fixed-rate bond?
There are some key differences between these 2 account types:
- Interest earned in an ISA product is not taxable.
- You can pay up to a maximum of £20,000 per tax year into a cash ISA, while the bond provider sets the maximum for a fixed-rate bond and typically runs into hundreds of thousands.
- Banks are legally obliged to let you access your funds held in an ISA at any time (but they can charge you a penalty to do so). By contrast, funds held in bonds are typically only released early if the account holder passes away or goes bankrupt.
- Interest rates tend to be higher on fixed-rate bonds, compared to fixed-rate ISAs. However, this isn’t always the case, so it’s worth checking both for the term you have in mind.
There are also plenty of similarities. For example, you’re guaranteed a specific rate for an agreed term with both account types, and you usually can’t add more money during the term.
An overview of our fixed-rate cash ISAs comparison
| Rates up to | 4.5% AER |
|---|---|
| Number of accounts | 316 |
| Number of brands | 67 |
| Terms | 6 months - 7 years |
| Minimum investment | £0 |
| Maximum investment | £100,000 |
| Opening options | Website, mobile app, telephone, branch, post |
Bottom line
In the past, interest rates were so low that the benefits of cash ISAs simply weren’t meaningful for most people because very few savers would exceed their personal savings allowance. But now that interest rates are high, more savers are likely to get caught out by tax, meaning cash ISAs are relevant again.
If you have a lump of cash ready to invest in one and don’t think you’ll need it for a while, a fixed-rate cash ISA could allow you to access some of the best rates in the market.
Where interest rates will be in 2 to 5 years is hard to call, however, so fixing for longer periods won’t be for everyone.
Frequently asked questions
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
More resources on Finder
More guides on Finder
-
Compare these 5-year fixed rate cash ISAs
Find all you need to know about 5-year fixed-rate cash ISAs and scan live rates.
-
3-year fixed rate cash ISAs
Find all you need to know about 3-year fixed-rate cash ISAs and scan live rates.
-
Best 2-year fixed rate cash ISAs
Find out more about the pros and cons of 2-year fixed rate cash ISAs
-
Best 1-year fixed rate cash ISAs
Learn more about the pros and cons of 1-year fixed rate cash ISAs