9 Best Fixed Rate Cash ISAs in UK With the Highest Interest Rates 2024
Updated February 4, 2024
With benefits like earning tax-free interest on savings and saving money on rising interest rates, fixed-rate cash ISAs are fast becoming one of the best long-term investment options in the UK.
By putting money into these accounts, your money will no longer lose value (despite continuing inflation) and will even earn interest.
That said, before you start investing in these accounts, it's a good idea to familiarize yourself with how they work.
To help you get started, we’ll offer guidance on fixed-rate cash ISAs, along with a list of the 10 best options on the current market. Read on to find out more!
Best Fixed Rate Cash ISAs in the UK
Account Term 1 year | AER 5.20% | Interest paid Annually/monthly | ||
Account Term 2 Years | AER 5.10% | Interest paid At maturity | ||
Account Term 1 year | AER 5.05% | Interest paid At maturity | ||
Account Term 18 months | AER 5.20% | Interest paid At maturity | ||
Account Term 1 year | AER 5.55% | Interest paid At maturity/monthly | ||
Account Term 5 years | AER 4.30% | Interest paid At maturity | ||
Account Term 1 year | AER 5.45% | Interest paid At maturity/monthly | ||
Account Term 1 year | AER 5.43% | Interest paid At maturity/monthly | ||
Account Term 1 year | AER 5.70% | Interest paid At maturity/monthly |
1. Paragon One Year Fixed Rate ISA
With a 5.20% AER guaranteed until interest maturity, this ISA can be an excellent option for your annual savings.
You can also opt for monthly interest payments and save between £500 (the minimum deposit) and £500,000.
You can open and manage your account directly through a provider or through post. You must be a UK resident (for tax purposes) and over 18 years old to open the Paragon 1-Year Fixed Rate ISA.
While there aren't additional costs associated with opening or managing the account, withdrawals made before maturity are subject to 90 days’ loss of interest.
With its excellent interest rate, this is a strong contender for the best fixed cash ISA rates for one year.
Visit Paragon One Year Fixed Rate ISA
2. Leeds Building Society 2-Year Fixed Rate ISA
If you're looking for the best two-year fixed ISA, Leeds Building Society's two-year Fixed Rate ISA is worth looking into.
The account has a 5.10% AER, which will be paid to you penalty-free at interest maturity.
The minimum deposit for operating the account is a reasonable £100, while the maximum you can invest tax-free is £20,000 annually.
You can open your fixed-rate ISA account with the provider in just a few easy steps, regardless of whether you are a new account holder or already have an ISA or another account with the provider.
Visit Leeds Building Society 2-Year Fixed Rate ISA
3. Leeds Building Society 1-Year Fixed Rate ISA
For those who aren't willing to lock their money in for a longer period, Leeds Building Society also offers a One-Year Fixed Rate ISA. This one has a slightly lower AER of 5.05% but also comes with the benefit of receiving payments annually.
You can reinvest your earnings into another fixed-rate ISA or withdraw it in cash.
The minimum deposit is the same, £100, and the same terms apply as for the two-year term account.
Visit Leeds Building Society 1-Year Fixed Rate ISA
4. Monmouthshire Building Society 18 Month Fixed Rate ISA
With a minimum deposit of £1,000, Monmouthshire Building Society 18 Month Fixed Rate ISA is one of the most expensive accounts.
However, with the 5.20% fixed AER, you can save a considerable amount and use it between tax years.
You can open the account online in a few easy steps (by verifying your identity), in person in one of the provider's branches or through an agency.
You must be at least 16 years old and a UK resident to open the account.
Those in overseas civil service or diplomatic Crown service and their spouses and partners can also open an account even if they don't live in the UK.
Visit Monmouthshire Building Society 18 Month Fixed Rate ISA
5. Aldermore One Year Fixed Rate Cash ISA
Another contender for the one-year term accounts is the Aldermore one-year Fixed Rate Cash ISA.
There is a 5.55% AER fixed for one year, and it is guaranteed whether you opt for monthly withdrawals or at maturity.
The minimum deposit for this account is £1,000, but you can save up to £1,000,000 by transferring from other ISAs from previous years.
You can only open and manage this account via the provider's website, and you must be at least 18 to open the account.
While interest is typically paid tax-free, in some cases, it can be taxable depending on your personal circumstances.
Visit Aldermore One Year Fixed Rate Cash ISA
6. West Brom Building Society Five-Year Fixed Rate ISA
With a fixed interest rate of 4.30% tax-free AER until the end of the five-year terms, this West Brom Building Society ISA is no doubt the best 5-year fixed rate ISA.
The minimum deposit is £1, while the maximum you can save per tax year is £20,000.
Additional charges (equivalent to 365 days of loss of interest) apply upon withdrawal and early closure.
You must be at least 16 years old at the time of opening the account, and you must do it in person in a branch or by post.
Online opening isn't available for this account, but you can review it on the provider's website.
Visit West Brom Building Society Five-Year Fixed Rate ISA
7. Charter Savings Bank 1 Year Fixed Rate Cash ISA
This is another top fixed rate ISA and comes with an attractive AER of 5.45%, which is fixed until the end of the contract terms.
No withdrawals are allowed; you can close and access the funds at maturity. However, interest payments are also available monthly.
Opening the account is exclusively online, and you must be at least 18 years old to become an account holder. Moreover, you must make a lump sum of £5,000 as a minimum deposit. It's possible to compound and pay interest into separate accounts.
Visit Charter Savings Bank 1 Year Fixed Rate Cash ISA
8. Kent Reliance One-Year Fixed Rate Cash ISA
This account is available in two modules.
One comes with a 5.43% AER, guaranteed until the one-year term completion.
The other ones have a monthly interest rate of 5.30%, which applies if you choose the monthly payout option.
You can open and manage your account online or in a branch by making a minimum deposit of £1,000. You must maintain a minimum operating balance of £1, while the maximum you can put into savings is £1,000,000 (£20,000 per tax year).
Visit Kent Reliance One-Year Fixed Rate Cash ISA
9. Virgin Money 1-Year Fixed Rate Cash E-ISA
This one-year fixed-term ISA comes with an AER of 5.70%, guaranteed until maturity, or a 5.56% monthly interest, depending on how you schedule your interest payments.
Both are tax-free and can be started with a minimum deposit of £1.
There is also a minimum additional deposit of £1 and a minimum operating balance of £1.
Your capital will start earning interest right away, but you can only withdraw your deposit after six working days.
UK residents aged 16 or over can open and manage the account by cash deposit (in branches only), cheque, electronic transfer, transfer from an existing Virgin Money account or an existing Cash ISA or a Stocks and Shares ISA from another provider.
Visit Virgin Money 1-Year Fixed Rate Cash E-ISA
What Is a Fixed Rate Cash ISA?
ISA stands for Individual Savings Account, a unique form of tax-free investment in the UK. Along with tax exemption, Cash ISA accounts allow you to forgo paying interest on your investment.
They are also convenient for those who don't have to worry about breaching their personal savings allowance, as putting the money into a Cash ISA locks it away for a certain time period.
How much you can put away tax-free into your ISA accounts is limited by government regulations.
There are two main forms of Cash ISAs, one grants easy access, while the other has a fixed rate.
Unlike the easy access version which you can access anytime, the fixed-rate account locks in your money for the duration of the deal.
While usually, you access the money in your fixed-rate ISA before the investment matures, some providers allow withdrawal in exchange for a penalty, which might result in losing already accrued interest.
The main benefit of opting for a fixed rate Cash ISA is being able to earn a predictable amount over a set time. This is unlike in the easy access version where the interest rate varies based on when you access the money.
Other benefits include being exempt from paying taxes on the interests and ensuring long term savings.
What Happens When a Fixed Rate Cash ISA Expires?
You might also be wondering what happens when your Cash ISA comes to term.
Knowing what happens to the fixed rate and the ISA itself will give you an overview of the possible future options you have available with this account type.
A fixed-rate ISA offers a set interest for one to five years (sometimes, this can be extended to seven years).
If you keep your money in the account for the set period, the provider will pay the agreed interest rate upon maturity.
When your investment expires, you have several options. For instance, you can choose to reinvest your money elsewhere.
This could be another ISA account (cash, stocks and shares, lifetime or innovative finance) with the same or other provider or even a non-ISA account.
By transferring your savings into another ISA account, you can maintain their tax-free status.
You can also withdraw cash from your account any time after the interest matures.
Or, you can add the current or previous years' savings onto the same account and reinvest it along with your previous fixed-rate savings.
Your provider will notify you when your investment matures and offer several options on how to move forward.
Most providers suggest automatic reinvestment into another ISA, which is what happens if you choose to do nothing when the deal expires.
Your savings will be reinvested with a recalculated fixed rate, just like it happens if you decide to top them up with that year's savings.
How to Find the Best Fixed 1 Year Cash ISA Rates UK
It's also a good idea to learn how to choose and find the best deal for yourself.
Below are a few factors to consider when looking for the best fixed-rate cash ISA rates in the UK.
Step 1. Knowing Your Savings Goals and Objectives
As their name implies, fixed-rate Cash ISAs are great options for fixed saving goals.
You can fund only one ISA at a time per tax year, so if your savings objective is to save money every year, you can opt for yearly maturation periods and reinvest your fixed rate accounts by topping it up with the current year's savings every year.
Your choice might also depend on whether you want to open another type of ISA, like stocks and shares ISA, for example.
Different ISA providers offer different options for transferring money between ISA accounts, so make sure to look into these options when choosing your fixed-rate cash ISA.
Step 2. Comparing the AER With Your Goals in Mind
Once you have your savings objectives clearly before you, you can compare the AER with these goals in mind.
Fixed-rate Cash ISAs are only suitable for long-term saving. However, with a maturity period ranging anywhere between one and seven years, you'll have several options to choose from when it comes to how long you're willing to lock your money away.
Longer maturity periods (three-year fixed rate ISA and up) typically come with higher interest rates, which means you can get higher amounts of tax-free interest through them.
In contrast, if you choose an account with a shorter maturity period (one to two years), the interest accrued on your account will be lower, too.
Step 3. Understanding the Costs Involved
Finally, when looking for the best fixed rate cash ISA rates UK, you need to be aware of all the costs. This is because, beyond the costs of opening the account and depositing your money, there might be additional costs involved in using a fixed-rate cash ISA. For example, you might incur reinvestment costs after each maturity period.
Likewise, the different providers offer a range of periods, often with different expenses depending on the length.
Moreover, some also allow premature money withdrawal for a fee.
Look into what penalties apply (if the provider has this option) and consider whether it would be worth paying it if you can't wait for your investment to mature.
It's challenging to determine the single best-fixed rate ISA as rates can change, and different banks may offer competitive deals.
It’s important to do your own fixed rate comparison to see which one is most suited to your needs.
A fixed rate cash ISA is a type of individual savings account where you lock in your money for a set period, typically one to five years, and receive a fixed interest rate during that time. Withdrawals may be restricted or come with penalties.
To invest in a fixed rate cash ISA, you typically need to choose a bank offering such accounts, fill out the necessary application forms, and deposit the desired amount.
Make sure you understand the terms, including the fixed term and any penalties for early withdrawal.
The best fixed rate cash ISA can change often.
The right one for you can depend on several factors, including the term. It’s best to make a note of the features you’re looking for and find an account that more closely matches your needs.
The Virgin Money 1 Year Fixed Rate Cash E-ISA is the highest we found at 5.70%. However, any account offering a rate of 5% or above is generally seen as good.
Also, keep an eye out for new offers to see if any accounts are offering and even better rate.
Fixed rate ISAs provide stability but may limit access to your funds.
If you have saving that you are confident that you won’t need to access, getting a fixed rate ISA is generally one of the best finance tips.
There are several banks and building societies offering 7% interest or more, including Nationwide, Skipton Building Society, First Direct and Yorkshire Building Society.
However, these aren’t ISAs, and the rates are often variable and come with more rules than a fixed rate ISA.
Final Thoughts
Fixed-rate Cash ISAs enable you to save money in the long run and earn a fixed amount of interest on it without paying taxes on the latter.
Based on the accounts listed in the article, the current best fixed Cash ISA rates in the UK are 4% to 6%.
Cash ISAs are a fantastic investment opportunity for particular occasions (like when you can't get a personal savings allowance on your personal savings account) and a valuable addition to your saving/investment strategy.
Before investing in Fixed-rate Cash ISAs, consider saving your investment goals and the costs involved, and compare several accounts based on your objectives to find the option that suits you best.
WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
