Compare 1-year fixed rate cash ISAs

Looking for a better return on your savings? Find out if a 1-year fixed rate cash ISA could be the solution.

Cash ISAs are savings accounts that pay interest free of income tax. This means that no matter how much interest you earn on your savings in the account, you’ll never pay any tax on it.

Just like standard savings accounts, there are several types of cash ISAs to choose from. One option is a fixed rate cash ISA, which requires you to tie up your money for a set amount of time. In this guide, we explain how 1-year fixed rate cash ISAs work.

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The Financial Services Compensation Scheme (FSCS) guarantees that it will step in to compensate the first £85,000 (£170,000 for a joint account) you have saved with a UK-authorised bank, building society or credit union in the event that the business goes bust.

Compare 1-year fixed rate cash ISAs

Table: sorted by interest rate
1 - 6 of 54
Name Product Interest rate Invest Interest paid Withdrawals Deposit protection Incentive Apply link
Virgin Money – 1 Year Fixed Rate Cash ISA Exclusive Issue 4
4.25% AER fixed until 31.01.24
From £1
On maturity
Instant access (penalty applies )
FSCS logo
protected
Go to site
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Barclays Bank – Premier 1-Year Flexible Cash ISA - Issue 22
4.1% AER fixed for 1 year
From £1
On maturity (compounded annually)
Instant access (penalty applies )
FSCS logo
protected
Go to site
View details
Barclays Bank – Premier 1-Year Flexible Cash ISA - Issue 22
4.1% AER fixed for 1 year
From £1
Monthly
Instant access (penalty applies )
FSCS logo
protected
Go to site
View details
Barclays Bank – 1-Year Flexible Cash ISA - Issue 36
4% AER fixed for 1 year
From £1
Monthly
Instant access (penalty applies )
FSCS logo
protected
Go to site
View details
Barclays Bank – 1-Year Flexible Cash ISA - Issue 36
4% AER fixed for 1 year
From £1
On maturity (compounded annually)
Instant access (penalty applies )
FSCS logo
protected
Go to site
View details
Shawbrook Bank – 1 Year Fixed Rate Cash ISA Bond Issue 66
3.78% AER fixed for 1 year
From £1,000
Monthly
Instant access (penalty applies )
FSCS logo
protected
Go to site
View details
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What is a 1-year fixed rate cash ISA?

A 1-year fixed rate cash ISA is simply a cash ISA that requires you to lock away your savings for a term of 1 year. In return, you receive a fixed rate of interest that is usually higher than you’d get on an easy access cash ISA.

In many cases, you won’t be able to top up your funds during the term of the account and you won’t usually be able to make withdrawals either – or if you can, you’ll often pay a penalty fee. This will typically be a number of days’ interest. At the end of the term, your account will mature and you can either withdraw your funds or have them transferred to another ISA.

When comparing 1-year fixed rate cash ISAs, it’s important to check the minimum deposit requirement for opening the account. This can vary depending on the provider, and in some cases, it can be a few hundred or a few thousand pounds. Keep in mind that the maximum you can pay into ISAs overall stands at £20,000 for the 2022/23 tax year, and you can only open 1 cash ISA per tax year.

If, when you open your new cash ISA, you want to transfer in funds from another cash ISA with another provider, it’s important to check whether your new cash ISA permits this – not all cash ISAs allow transfers in, though many do. Transfers do not count towards the current year’s ISA allowance.

Do I need a cash ISA?

Thanks to the personal savings allowance, all basic rate taxpayers can now earn up to £1,000 a year tax-free on any interest from savings and current accounts. Higher rate taxpayers can earn up to £500, while additional rate taxpayers have no personal savings allowance.

As a result, if you’re a basic or higher rate taxpayer, you might be wondering whether putting money in a tax-efficient cash ISA is worth it. However, it’s important to keep in mind that at a time when interest rates are rising, those that have a decent amount in their savings pot could get closer to reaching their personal savings allowance limit. By contrast, saving your money in a cash ISA will ensure that you never get charged tax on your savings, no matter how much interest you earn.

Ultimately, you might decide you want to keep some of your savings in a standard account and some in a cash ISA.

How to open an ISA

How you open a cash ISA will depend on the provider. You might be able to do this in branch, online, via the provider’s app, by post or over the phone. You will usually need to fill in a short application form and provide a few personal details. You will also need to state whether you want to transfer in funds from another cash ISA elsewhere.

Unless you’re already a customer with that particular bank/building society, you will usually need to provide proof of ID, such as a passport or driving licence, and proof of address, such as a utility bill, council tax bill or bank statement.

Pros and cons

Pros

  • Earn a fixed rate of interest for the term of the account
  • Interest rates are more competitive compared to easy access cash ISAs
  • Ideal if you have a lump sum to invest
  • No tax is payable on the interest earned

Cons

  • You won’t be usually able to withdraw cash during the term without penalty
  • You often can’t top up your funds during the term
  • Interest rates will be less competitive compared to longer term fixed rate cash ISAs
  • You won’t be able to pay in more than your annual ISA allowance

Bottom line

Opening a 1-year fixed rate cash ISA can be a great option if you’d like to lock away a lump sum of cash for a short amount of time in return for a higher interest rate. It can be a sensible choice at a time when interest rates are rising as locking your money away for a longer period could result in you being stuck with an account that later becomes uncompetitive.

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