Given the current low interest rates, returns on fixed rate cash ISAs aren't as high as they used to be. However, if you're happy to lock away money for a fixed period, there are some alternative options you may want to consider.
If you're looking for alternatives to fixed rate ISAs that still protect your capital, structured deposit ISAs could be worth considering. Structured deposit ISAs are a type of fixed term deposit plan in which returns are linked to the performance of an underlying asset, such as the FTSE 100 Index.
If you've got a cautious approach to risk, but want the potential for higher returns than those currently offered by traditional fixed term ISAs, structured deposit ISAs may be of interest to you. While returns are not guaranteed, these ISAs do have the benefit of offering the potential for competitive rates of return.
A structured cash ISA offers the potential for higher returns than regular cash ISA, but is capital-protected. You can only save up to your maximum ISA allowance into an ISA of any type, including a structured deposit ISA.
Your returns are based on market performance. This means that if your investment performs well, you'll receive your capital back at the end of the term plus any income you made on the initial deposit. In the event that your investment doesn't perform well, your initial capital will be repaid in full, but you will not receive any additional return.
As structured deposit ISAs are cash based, they're eligible for the Financial Services Compensation Scheme (FSCS) - just like a regular cash savings account.
To see what structured products might be available you can check the comparison table at the top of this page to view a selection of options.
This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.