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Cash ISAs /

Fixed Rate Cash ISAs

Latest Fixed-Rate Cash ISA deals

The 2021/22 ISA allowance is £20,000.

Use your ISA allowance wisely by comparing our selection of market-leading fixed-rate cash ISAs to maximise your tax-free returns.

Fixed Rate Cash ISAs

1 Year Triple Access Cash ISA

from Nationwide

Interest Rate (AER) 0.25%
  • Term: 1 Year, with option to make three free withdrawals
  • Make up to three withdrawals during the 12-month term of this account
  • Open with £1 or transfer in existing ISA funds
  • Manage your account online
  • Interest paid at maturity
  • FSCS Protected
  • Must be UK resident and aged 16 or older
  • Make more than three withdrawals and the rate drops to 0.01% AER/gross p.a. (variable)
  • Not available in branch

Calculate your interest with this plan

Your savings:
£
You could gain:
£0.00 (per tax year)

Fixed-Rate Cash ISAs

After the Bank of England cut UK interest rates following on from the 2008 financial crisis, they have remained at extremely low levels ever since.

The European credit crisis, huge public borrowing and more recently Brexit and COVID-19 have all put pressure on central banks to keep interest rates close to zero.

Indeed, the amount of global debt issuance by investment grade companies paying negative interest rate hit just over 17 trillion USD recently – a new record - although perhaps not one to shout from the rooftops about!

So what kind of returns can I expect on fixed rate cash ISAs going forward?

The chart below from the BOE gives you a good visual aid on current cash return prospects.

"Looking at this graph
 if you are looking to invest for the longer term you have to question the logic of putting money into a standard fixed rate cash ISA".

Oliver Roylance-Smith, Head of investment & savings.

UK savers who keep money in long term savings accounts or Cash ISAs where returns are historically lower on fixed rate products will be doing very well to keep their money's buying power ahead of inflation.

"Are you one of the 8.5 million adults that subscribed more than £44 billion into Cash ISAs in the last tax year, or maybe you’re part of the £268 billion currently held in Cash ISAs?

Either way, its possible that you are receiving record low returns, with market leading interest rates only offering around 1.0% to 1.10% AER on 3 to 5 year fixed rate ISAs at the moment. So are there any other options to consider?"

Needless to say, investors are left scratching their heads in how to earn any meaningful yield on their money.

2 Alternative Options To Consider

1. Cash ISA Deposit Plan

If you’re prepared to forego a fixed return, MB’s popular Kick Out Deposit Plan, offers the same capital protection as any other bank deposit, but will pay 1.5% for each year (not compounded), provided the FTSE 100 Index at the end of each year from year 4 onwards, is higher than its value at the start of the plan (subject to averaging).

That’s a potential 6% after 4 years, 7.5% after 5 years, 9% after 6 years, etc.

Since the plan is also available as a Cash ISA, and accepts ISA transfers, if you’re thinking what else is there that could release greater potential from your cash, this is an option.

The downside is that the return is not guaranteed, so you could receive only your initial capital back.

More information »

2. Active Savings

Lets face it the best fixed cash ISA rates are not as competitive as the best non cash fixed ISA rates.

One of the challenges with cash is that rates are changing all the time and you need to be proactive in moving money when rates fall.

If you are looking for better returns on your cash (money held outside an ISA) & keeping your money in an ISA is less important than earning a top UK interest rate then...

The good news is that there is a new service offered by  Hargreaves Lansdown called "Active Savings" where you no longer have the hassle of opening, closing and transferring your savings between different banks and building societies.

Once your account is open, you can pick and mix savings products from a range of banks and building societies, without ever having to fill in another form. 

There are a range of products and terms to choose from, and you can have as many as you like.

With Active Savings there are a host of measures in place to help protect your cash. From Financial Services Compensation Scheme protection, to online encryption technology.

More information »

3. Stocks and Shares ISAs

If you are undecided on whether to go for a cash or stocks and shares ISA a key consideration is interest rates. 

"Right now interest rates
are about as low as they can get!"

With cash ISA provider instant access and fixed rate products offering sub 1% rates at the time of writing the challenge over time is that the buying power of your money will deteriorate due to inflation. As at July 2020 the Retail Price Index figure was measured at 1.6%.

The average 1 year fixed rate as at September 2020 was 0.44% (Source: Bank of England).

In real terms the average account holder in a 1 year fixed rate bond is losing money in real terms.

If you want to tackle inflation and you are happy to lock your money away for 5 plus years then you should seriously consider a stocks and shares ISA.

Hargreaves Lansdown have produced a useful guide if you are thinking of investing in an stocks and shares ISA.

Get FREE Guide »

Alternatively have a look at the different  investment ISA platforms available which allow you to set up an account and then you can decide what you want to invest in.

If you prefer you can opt for a service where the investing is done for you based on different risk profiles. E.g. Both  Legal and General and Fidelity offer a ISA stocks and shares service where you can leave the investing to them.

Important information - please keep in mind that the value of investments can fall as well as rise, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Fixed Rate Cash ISAs - What To Consider

Fixed-rate cash ISAs allow you to lock your tax-efficient cash ISA allowance away for a predetermined period at a fixed rate of interest.

Fixed-rate cash ISAs vary in timescale from six months to five years, and generally, the longer you are willing to lock your cash away, the higher the rate will be.

However, it's important to remember that fixed-rate accounts don't necessarily beat the highest rates on offer from non-cash ISAs. It's essential to research providers thoroughly before you commit, rather than assuming that a fixed-term ISA will automatically guarantee a superior rate.

Unlike instant access ISAs, fixed-rate ISAs mean that you run the risk of being unable to switch to a provider with preferable interest, at least until you've sat out the fixed term. So, you could find that the attractive fixed rate you started out with begins to look increasingly uncompetitive in comparison with subsequent instant access cash ISA rates.

The fixed term offered by this type of ISA does have the potential to some real advantages, however. As well as the possibility of a good rate of return over the long term, fixed-rate cash ISAs can be a useful way to save for a specific future event.

Knowing that you'll be penalised for early withdrawal from a fixed-rate ISA might make you think twice before using the cash for something else.

As with all types of ISA, there are various factors to consider, and the product that's best for you is likely to depend on your individual circumstances.

Things to look out for when choosing a fixed-rate cash ISA

There are a wide variety of fixed-rate ISA account deals to choose from, so we have highlighted some of the features to look out for:

  • Minimum ISA deposits - some fixed-rate cash ISA accounts require a minimum level of funding to get started. This can vary widely - from as little as £50 to upwards of £1,000 - so it's important to consider how much money you can realistically afford to tie up for the minimum term required. Once you've placed your minimum deposit, you can then add funds up to the ISA limit, which is £20,000 for 2020/21.
  • Additional bonus rates - many fixed-rate cash ISA accounts offer a bonus for new customers, paid at the end of a set period. There are often conditions attached to this offer, and savers should bear in mind that once this special bonus is paid, the ongoing interest rate may not be competitive. Be prepared to switch to a different ISA provider once this period ends.
  • Interest calculation method - some ISA providers pay interest monthly, while others do so quarterly or annually. Check this with your provider before opening a fixed-rate cash ISA.
  • Early closure penalties - if you close your fixed-rate cash ISA before the term is over, or withdraw money from it, you will face some form of penalty charge. This may be a loss of interest - for example, on a five-year fixed term cash ISA you could lose up to a year's tax-free interest if you close your account early.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

5 Considerations for Your Next Investment ISA

15th March 2021

You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply". 

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