AA Fixed Rate ISAs

Review of the AA Fixed term ISA

The AA offer a range of savings options including a one year or two year fixed rate ISA with competitive interest rates. Please see the comparison tables for more details on rates.

The AA ISA lets you put money across easy access or fixed term products or even split your savings across both , all within one ISA. You can pay up to £20,000 this tax year, depending on other stocks, shares or innovative finance ISA contributions.

Features:

1. One or two year terms
2. Interest that is calculated daily and paid annually on the anniversary of the product opening
3. While you can only make one deposit per product, you can have as many fixed rate products as you want
4. You can open with a minimum of £500
5. Ability to transfer ISAs held elsewhere, just check with your current provider for their terms

Accessing your money:

1. If you need access to your money during your fixed term you'll need to pay a breakage charge. So, if you haven't earned enough interest, you may get back less than you originally paid in
2. At the end of the fixed term they will pay your money, along with any interest, to a tax-free holding account while you decide what to do next
3. You can only transfer out the full amount and will be subject to charges if you do so
4. You can manage your account 24/7 with online banking
5. Every AA ISA comes with a holding account automatically, so you can decide how to organise your finances once your term finishes.

Overall this is a great account with a competitive rate of interest and the flexibility to choose a term which suits you. The holding account gives you time to decide what to do next.

Why use a Fixed Rate ISA?

Typically, a fixed-rate Isa account will pay more interest. In exchange for a higher rate, banks will ask you to tie up your money. Generally, the longer you give up access, the higher the return. As it is a guaranteed amount, you know what you will end up with at the end which makes it a lot safer than investing.

ISAs are a good idea whatever your savings goal. With certain types of cash ISAs, you have instant access to your money, which makes it a flexible way to plan your finances.

It’s also important to remember that ISA allowance limits apply to everyone on an individual basis, so if you’re married or in a relationship, you can both hold your own ISA, each with the full allowance.

AA is one of the few banks that offer a Fixed Rate of ISA for one year or two years with many offering a two year minimum and some up to five year minimums. For many people this time frame isn’t convenient and so this offers an easy way for savers to take the plunge and begin their savings.