Fixed-rate ISAs

AER, or annual equivalent rate, shows you how much your savings could earn in interest over a year. It’s helpful when you’re comparing savings accounts.

AER takes into account any compound interest (that’s interest earned on previously earned interest) and should include any bonus introductory rates.

You can pay into multiple ISAs, including more than one ISA of the same type.

There are a couple of exceptions though. You can only pay into one Lifetime ISA (LISA) each year. And a child under 18 can only have one junior cash ISA and/or one junior stocks and shares ISA.

UK cash ISAs are protected by the Financial Services Compensation Scheme (FSCS) as long as the ISA provider is regulated by the Financial Conduct Authority.

The FSCS protects up to £120,000 per saver (£240,000 for joint accounts) per bank, building society or banking group, should the provider go bust.

Yes, you can open a fixed-rate ISA if you have poor credit. That’s because your finances aren’t checked when you open a savings account. Neither do you have to go through a credit check.

Yes, you can combine old ISAs into one new ISA, if that ISA provider accepts transfers. You can transfer ISA accounts as many times as you like.

Make sure you fill out an ISA transfer form. If you take out the money yourself, you’ll lose the tax-free benefits.

No, interest paid on an ISA doesn’t count towards your ISA allowance. The limit only applies to money you pay into an ISA.

With some fixed-rate ISAs, it’s possible to top up the account after your initial deposit, but there’s likely to be a time limit for doing this.

When your fixed-rate ISA reaches the end of its term (matures), you can:

• Close the ISA and take the cash

• Reinvest the money in another ISA with the same provider

• Transfer the money to another ISA provider.

If you don’t do anything, your money will be moved into an instant-access cash ISA with the same provider, perhaps at a lower interest rate.

To make sure you’re getting the most out of your savings, set a reminder to compare new ISA accounts when yours is ready to mature.

When someone dies and their fixed-rate ISA is still active, it becomes a ‘continuing deceased’s account’. The account will stay open for three years and one day after the account holder’s death, but no money can be added to it.

The ISA can be closed by the executor of the will once the administration of the deceased person’s estate is complete.