Best fixed rate Cash ISA rates

How the early access penalty works

Locking your rate is the trade for accepting a penalty if you need the money before the term ends. Providers usually charge a set number of days' interest on the amount withdrawn early, commonly 90 days for a 1 year fix, up to 270 or 365 days for a 3 to 5 year fix. The exact number varies by provider and term, so check the figure in the table above rather than assuming it scales evenly with the term length.

A handful of fixed rate Cash ISAs do not allow early access at all, whatever penalty you would be willing to pay. If there is any real chance you will need the money before the term is up, an easy access or notice Cash ISA removes that risk, even at a lower headline rate.

Choosing a term

The right term depends on when you expect to need the money, not only on which rate looks highest today. Money you might need within the next year sits more comfortably in an easy access account. Money you are confident you will not touch for three to five years can chase the higher rate a longer fix sometimes offers, accepting that your rate will not move even if other rates rise while you are locked in.

Because a fixed rate is set for the whole term, it is also a bet on where interest rates are heading. A shorter fix gives you the option to re-fix at a new rate sooner, which matters if you expect rates to rise; a longer fix protects you if you expect rates to fall.

Splitting money across terms

Rather than committing everything to one term, some savers split a lump sum across two or three different fixed rate ISAs of different lengths, sometimes called laddering. This spreads out when each portion becomes available, so you are not entirely locked out of your money at once, while still earning a fixed rate on most of the balance. Since 6 April 2024 you can hold more than one Cash ISA in a tax year, which makes splitting new money this way straightforward. Splitting an existing balance usually means opening each fixed rate ISA as a separate transfer instead.

What happens when the term ends

Most providers write to you shortly before a fixed term matures to ask what you want to do next: move to a new fixed term at whatever rate is on offer then, switch to an easy access account, or transfer out to a different provider entirely. If you do not respond, many providers automatically roll the balance into a new fixed term or an easy access account at their own standard rate, and that rate is not always competitive. It is worth acting on a maturity notice rather than ignoring it, and comparing the table above again when your current term is due to end.

Deposits, transfers and protection

Fixed rate Cash ISAs typically ask for a lump sum when you open the account and a minimum deposit, shown in the table above, which is often higher than for an easy access account. Many only accept new money for a short window after the account opens, commonly 14 to 30 days, so check the funding deadline rather than assuming you can add more later. Most accept ISA transfers in from other providers, but check the individual account, since not all do. As with any Cash ISA, deposits with an authorised UK bank, building society or credit union are protected by the Financial Services Compensation Scheme up to £120,000 per person, per banking licence.