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Compare fixed-rate cash ISAs

If you have savings you won’t need to access for a while, choosing one of our highest paying fixed-rate ISAs could be a reliable way to earn interest on them.

We take a look at how fixed-rate ISAs work and what the tax benefits really mean.

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What is a fixed-rate ISA?

Fixed-rate cash ISAs are tax-free savings accounts that you open for a specific period, which ranges from one to five years.

As with all cash ISAs:

  • You can pay in up to your ISA allowance each tax year. In the current 2024/25 tax year, that’s £20,000.
  • You don’t have to pay tax on any interest you earn.

With a fixed-rate ISA, you’ll typically have a set window in which to deposit your savings. This is often within 14 or 30 days after opening the account, or sometimes by a specified date. You may have to deposit a minimum amount to open the account.

Can I make withdrawals from a fixed-rate ISA?

Once you’ve put money into your ISA, you need to keep it in the account for the term. Otherwise, you’ll typically pay a big penalty to withdraw money early. In return, you’re guaranteed a fixed rate of interest for that term.

Fixed-term vs easy access cash ISAs

Fixed-rate cash ISAs pay a fixed level of interest for a set period. But there are usually penalties to make a withdrawal and you normally can’t deposit money after a certain period or date. 

If you do need the cash unexpectedly before the fixed term ends, you’ll probably have to pay a fee. 

With an instant access cash ISA, interest rates can change, typically in line with the Bank of England base rate. And the rates may not be as high as a fixed-rate ISA.

But you can access your money whenever you want from an easy  access cash ISA, without paying a penalty. And you can typically pay in more money whenever you want – up to your personal ISA allowance for that tax year.

So the trade off is:

  • Certainty and potentially higher starting rates with a fixed ISA versus
  • Flexibility with an easy access account.

ISA changes in 2024 you should know about

A few important ISA changes came into effect in April 2024. These include:

  • You can now subscribe to multiple ISAs of the same type within the same tax year.
  • You must be over 18 to open an ISA account. Previously, you could open an ISA from the age of 16. If you’re 16 or 17 and you already have an existing cash ISA, you can hold onto it or transfer it in full to a new cash ISA account.
  • You can make partial transfers from an existing ISA account into a new one, as long as the new provider accepts partial transfers.

Other types of ISAs you might consider

ISAs are savings accounts where you pay no tax on the return you make. But there are other types of ISAs:

Lifetime ISA

Lifetime ISAs are available to open for savers aged over 18 and under 40 years old. They’re designed to help you buy your first home or save for retirement. You must be 18-39 to open once and you can put £4,000 into a lifetime ISA each tax year until you’re 50. The government will add a 25% bonus on top of anything you add, up to a maximum of £1,000 in each tax year.

You have very limited withdrawal options with a lifetime ISA, as you face steep penalties if you don’t use the money for a first home or for retirement.

You can’t compare lifetime ISAs with Compare the Market. 

Junior ISA

Junior ISAs can be opened by the parents or guardians of children under 18 years old. In the 2024/25 tax year, you can save up to £9,000 for your child in a junior ISA. The money in the account belongs to the child, which they can withdraw once they turn 18. 

You can’t compare junior ISAs with Compare the Market. 

Stocks and shares ISA

This type of ISA lets you invest in the stock market through shares, funds, trusts and bonds. The benefit of a stocks and shares ISA is that you won’t have to pay tax on the money you earn from your investments. 

But the value of your investments could go down as well as up. And there’s no guarantee that your investments will do well. You could end up with less money than you put in. 

You can’t compare stocks and shares ISAs with Compare the Market. 

Innovative finance ISA

An innovative finance ISA lets you use your tax-free ISA allowance to invest in peer-to-peer (P2P) lending.

If you’re considering an innovative finance ISA (IFISA), it’s recommended that you talk to a financial advisor to make sure you fully understand the risks as well as the potential rewards.

You can’t compare innovative finance ISAs with Compare the Market. 

Is a fixed-term ISA right for you?

A fixed-rate cash ISA could be worth considering if:

  • You’re over or approaching your personal savings allowance limit and don’t want to pay tax on any further interest you earn.
  • You’re happy to effectively lock your cash away for a set period, but still want the option of accessing it if you need to – even if you have to pay a penalty. 

What are the advantages of a fixed-rate ISA?

Opening a fixed-rate ISA offers a range of benefits to help boost your savings:

  • They guarantee a level of interest so you can plan your finances more accurately.
  • The interest rates could be higher than other ISAs or savings accounts – although this isn’t guaranteed, so it’s worth comparing your options. 
  • If interest rates go down, you’ll continue to benefit from higher fixed rates.
  • You won't have to pay tax on the interest you earn.

What are the disadvantages of a fixed-rate ISA?

  • If interest rates go up, you could miss out on higher rates
  • You might face penalties if you try to get your money out before the end of the term
  • You may not be able to add more money after your initial deposit.

How to find a good fixed-rate ISA 

Here are some factors to consider when trying to find a good fixed-rate ISA:

The interest rate (AER)

The interest is key as it determines what return you will get on your money. But it’s always worth comparing rates from different ISA providers to see if you can get a better deal.

The fixed interest term

Think carefully about how long you’re willing to effectively lock your money away for. While you can make withdrawals early, they’re usually subject to big penalties.

And consider how interest rates may change during that term. While no-one has a crystal ball, if interest rates rise, what sounded like a great rate at the beginning of the term might not seem so attractive – but you’ll be stuck with it. Of course, if they go the other way, then you could be laughing with a fixed rate.

Access to your money

If you think you might need to access your cash before the account matures, consider an easy access cash ISA instead.

Compare ISAs 

Finding a good fixed-rate ISA could be easier if you compare rates, terms and potential penalties from multiple providers. With our comparison tool, you can compare cash ISAs from our panel of providers to find an account that suits your needs.

If you’re in any doubt about whether a fixed-rate cash ISA is right for you, you should take expert financial advice.

How do I transfer from one ISA to another?

To move money from one ISA to another, contact the new ISA provider and fill out an ISA transfer form.

The golden rule is don’t do it yourself. If you take the money out of your account yourself to deposit elsewhere, you’ll lose the tax-free benefits.

Not all ISA providers will accept transfers in, so check first. Some providers will only accept transfers within a fixed number of days from opening your account. Again, make sure you check this.

If you want to transfer your fixed-rate ISA before it matures, you may have to pay a penalty.

Can I transfer an ISA to someone else?

An ISA is an Individual Savings Account, which means it can’t be transferred from one person to another.

Frequently asked questions

What is AER?

The AER, or annual equivalent rate, shows you how much your savings could earn in interest over a year.

AER is helpful when you’re comparing savings accounts. It also takes into account any compound interest (that’s interest earned in addition to any interest already paid) and any bonus introductory rates.

How many ISAs can I pay into a year?

You can pay into multiple ISAs, including more than one ISA of the same type. The exception is a Lifetime ISA as you can only pay into one within a tax year.

Is my money safe in a fixed-rate cash ISA?

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

The FSCS protects up to £85,000 per saver (£170,000 for joint accounts) per bank, building society or banking group, should the provider go bust.

Can I get a fixed-rate ISA with bad credit?

You can open an ISA regardless of your credit score. ISAs aren’t considered credit products, because, unlike a credit card or bank account, you can’t borrow or enter an overdraft on your account. This means you won’t need to pass a credit check to open a fixed-rate ISA.

Can I combine older ISAs into one?

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 won’t be able to reinvest that part of your tax-free allowance again.

What happens at the end of the fixed-rate term?

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

  • 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 a new ISA account 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. 

What happens to a fixed-rate ISA when someone dies?

When someone dies, their fixed-rate ISA will end when either:

  • The executor of the will closes it
  • The administration of the deceased’s estate is complete.

Otherwise, the ISA provider will close the account three years and one day after the account holder’s death. 

The money in the ISA becomes part of their estate, just like the rest of their savings, property and other assets, and could be subject to inheritance tax.

If your husband, wife or civil partner has died and they had an ISA, you can inherit their ISA allowance. What this means is you inherit a temporary ISA allowance that’s equal to the value of the ISA they had. This will be in addition to your existing personal ISA allowance.

The ISA provider can talk you through this.