If you have a lump sum to invest that you don't need to access any time soon, a fixed-rate cash ISA could be a good place to stash it.
Cash ISAs are tax-free accounts, which means you don't pay tax on any of the interest earned. Just keep in mind you can only invest up to £20,000 into an ISA each tax year.
Comparing each account type is a good idea that will help you take advantage of the best features of the top accounts.
In this article, I'll look at the best fixed-rate cash ISAs to help you compare your options.
| Provider | Score | Details |
|---|---|---|
| 1. Metro Bank | ★★★★★ | Learn more |
| 2. Saffron Building Society | ★★★★★ | Learn more |
| 3. Santander | ★★★★★ | Learn more |
| 4. Nationwide | ★★★★★ | Learn more |
| 5. Lloyds Bank | ★★★★★ | Learn more |
| 6. Aldermore | ★★★★★ | Learn more |
| 7. Barclays | ★★★★★ | Learn more |
What Is a Fixed Rate Cash ISA and How Does It Work?
A fixed rate cash ISA is a type of cash ISA that offers a fixed rate of interest for a set term, typically one to five years. You can't usually access your money during the term of your account.
You'll usually need to pay a deposit at the beginning of the term and no additional deposits can be made after that.
You'll also need to leave those funds untouched until the account matures. In return, you'll receive a competitive interest rate. This rate will not change during the fixed term.
What Are the Features of Fixed Rate Cash ISAs?
Fixed-rate cash ISAs have a few specific features you'll need to be aware of. It’s worth thinking about these features before you apply for an account.
- Guaranteed rate of interest — The rate of interest won't change during the term of the account, which means you don't need to worry that it will suddenly drop.
- Term — This is how long the account lasts for. Terms available typically range from one to five years.
- Options for renewal — In some cases, once your account matures, you might be able to renew the account for another fixed term.
- Limited withdrawals — In most cases, you won't be able to access your funds during the term of the account, or if you can, a penalty will often apply – usually a number of months' interest.
- Transfer-in services — Some fixed-rate cash ISAs allow you to transfer in money from other ISAs. You will often need to do this when you first open the account.
- Limited deposits – Most fixed-rate cash ISAs require you to pay in funds within say, 30 days of opening the account and no further deposits can be made after that. You can only pay up to £20,000 into an ISA each tax year.
Compare Fixed Rate Cash ISAs (Our Top Picks for 2024)
There are a number of different fixed rate cash ISAs available.
I've looked closely at each of the best options and have outlined them below.
Product Name | Rate (AER) | Min Deposit | Max Balance | Access |
|---|---|---|---|---|
1. Metro Bank Fixed Rate Cash ISA | 3.90% AER (fixed) | £1 | £20,000 | Branch |
2. Saffron Building Society Fixed Rate Cash ISA | From 4.10% AER (fixed) | £500 | £500,000 | Online/Branch/Post |
3. Santander Fixed Rate Cash ISA | From 3.75% AER (fixed) | £500 | £2m | Online/Branch/App |
4. Nationwide Fixed Rate Cash ISA | From 4.20% AER (fixed) | £1 | £20,000 | Online/Branch |
5. Lloyds Bank Fixed Rate Cash ISA | From 4.20% AER (fixed) | £3,000 | £20,000 | Online/Branch/App/Phone |
6. Aldermore Fixed Rate Cash ISA | From 4.25% AER (fixed) | £1,000 | £20,000 | Online |
7. Barclays Fixed Rate Cash ISA | From 4.35% AER (fixed) | £1 | £1m | Online/Branch/App |
1. Metro Bank Fixed Rate Cash ISA
You can earn up to 3.90% AER with Metro Bank‘s fixed-rate cash ISAs and you will receive the interest annually. There's £1 minimum deposit for opening the account.
It's possible to transfer money from existing ISAs into your Metro Bank cash ISA, but again this must be done within 30 days of opening your account.
Terms of one, two, three or five years are available.
For each of these terms, a different interest rate applies. The top rate of 3.90% AER applies to a one-year term. If you store your money for two years, a 3.50% interest rate applies. The three-year and five-year account offers a rate of 3.00% AER.
To qualify you need to be at least 18 years old and a UK resident. You’ll need a national insurance number. You will also need to be a UK resident and have proof of identity.
Withdrawals are not permitted during the account term. If you close the account early, you'll lose 180 days' interest. After the account matures, you can select a new ISA or close the account.
2. Saffron Building Society Fixed Rate Cash ISA
You can choose from one-year and two-year fixed-rate cash ISAs with Saffron Building Society. The one-year account pays 4.30% AER and the two-year account pays 4.10% AER.
The minimum deposit you'll need to make is £500. You can't make any withdrawals during the term and if you close the account early, you will lose 180 days' interest.
The accounts can be opened online, in the branch, or by post.
You must pay your deposit into the account within 30 days of opening it. You can't add any further money after this.
Transfers in from other ISAs aren't permitted. You need to be a UK resident and over 18 years old to apply.
3. Santander Fixed Rate Cash ISA
With Santander, you can choose from a one-year fixed rate cash ISA paying 4.15% or a two-year fixed rate ISA paying 3.75%.
Santander will pay this interest annually and as the rate is fixed, it won't change during the term of the account.
You can open the account with at least £500 and transfer in funds from other ISAs. Transfers must be completed within 30 days of opening the account.
You can withdraw money by closing the account. A charge equivalent to 120 days’ interest will be applied.
To be eligible, you must be at least 18 years old and a UK resident. You can manage the account using telephone banking, mobile banking, or in a branch.
4. Nationwide Fixed Rate Cash ISA
With Nationwide, you can choose from a one-year fixed rate cash ISA paying 4.50% AER and a two-year option paying 4.20% AER.
These rates are calculated daily and added to your account at the end of the term.
To open the account, you'll only need a deposit of £1, but keep in mind you can't add more money to your account once it's opened.
You can withdraw money, but you'll have to take out all of your money and close the account. If you do this, you'll need to pay an early access charge. This charge depends on the length of the term and is based on a number of days' interest at the interest rate that applies to your account.
You'll need to be at least 18 years old and a UK resident to open a fixed-rate cash ISA with Nationwide.
5. Lloyds Bank Fixed Rate Cash ISA
Both one-year and two-year fixed-rate cash ISAs are available from Lloyds.
The one-year cash ISA pays 4.45% AER and the two-year account pays 4.20% AER. Plus, an extra 0.05% AER/tax-free if you already have a Lloyds Bank personal current account which has been open for at least 40 days.
These accounts require a minimum deposit of £3,000 and they can be managed online, over the phone, in the app or in the branch. Transfers in from other ISAs are permitted.
You can withdraw money from this account but you will be charged the equivalent of 90 days' tax-free interest.
In terms of eligibility, you need to be 18 or over and a UK resident for this account. When the accounts mature, they will change to an Instant Cash ISA.
6. Aldermore Fixed Rate Cash ISA
Aldermore has a 2 year fixed rate cash ISA available. It pays 4.25% AER with a minimum opening balance £1,000. You can't make additional deposits once the account is open.
Transfers in from other ISAs are allowed. If you access your funds during the term, Aldermore will deduct interest.
Once the account term ends, you'll be given the option of what to do with your funds. If you don't reply, your money will be moved into a 30 day notice cash ISA account.
7. Barclays Fixed Rate Cash ISA
Barclays is another provider offering fixed-rate cash ISAs, but with added flexibility.
The bank offers both a one-year and an 18-month fixed-rate cash ISA and you can open these with just £1. The one-year account pays 4.60% AER and the 18-month account pays 4.35% AER.
Unusually for a fixed-term account, you can make up to three withdrawals during the term, up to 10% of your current balance. You can also transfer in existing funds from other ISAs within 30 days of opening the account. The minimum opening value required for transfers is £0.
Another bonus is that you can pay in further funds as and when you want to, making these accounts suitable if you want to save regularly. If you're an existing customer, it's easy to open your account online or in the app. If you're not an existing customer, you will need to make an appointment to open your account in a branch.
Our Verdict
Fixed rate cash ISAs can offer competitive interest rates to help your savings grow.
As the rate is fixed, you'll know exactly how much interest you will earn during the term of the account. That's why they can be a great choice if you have a lump sum to invest, you don't need to access that cash for a year or more, and you want to ensure you earn tax-free interest.
As with any financial product, the key is to shop around and compare accounts and interest rates carefully.
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