Compare 2-year fixed rate cash ISAs

If you have a lump sum you're happy to lock away for a couple of years, a 2-year fixed rate cash ISA could be a good option.

Saving into a cash ISA means that you’ll never have to pay any income tax on the interest you earn on that account. You can pay up to £20,000 into an ISA each tax year and, just like standard savings accounts, there are several types of cash ISAs to choose from.

This guide takes a detailed look at how 2-year fixed rate cash ISAs work.

FSCS logo
Is my money safe?

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 2-year fixed rate cash ISAs

Table: sorted by interest rate, promoted deals first
1 - 7 of 72
Name Product Interest rate Invest Interest paid Withdrawals Open via Deposit protection Open via Incentive Table product description Apply link
Aldermore – 2 Year Fixed Rate Cash ISA
4.25% AER fixed for 2 years
From £1,000
Monthly
Instant access (charge applies )
Website
FSCS logo
protected
Open via: website
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Aldermore – 2 Year Fixed Rate Cash ISA
4.25% AER fixed for 2 years
From £1,000
Anniversary of account opening
Instant access (charge applies )
Website
FSCS logo
protected
Open via: website
Go to site
View details
Royal Bank of Scotland – 2 Year Fixed Rate ISA Issue 345
4.2% AER fixed until 21.05.26
From £1,000
Yearly
Instant access (charge applies )
Website, mobile app, telephone
FSCS logo
protected
Open via: website, mobile app, telephone
Rate available until 5pm on 03 April 2024 for new customers and 24 April 2024 for existing customers. Offer may be withdrawn early due to limited availability. Early Closure Charge may apply. The Early Closure Charge will be the lower of the amount of interest earned on your account or 90 days' interest. Must not have subscribed to another cash ISA in the same tax year and you must hold the account solely in your name. Available to new & existing customers. Interest is calculated daily and paid annually to your ISA on the first business day in April and on the Maturity Payment Date.
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NatWest – 2 Year Fixed Rate ISA Issue 345
4.2% AER fixed until 29.05.26
From £1,000
Yearly
Instant access (charge applies )
Website, mobile app, telephone
FSCS logo
protected
Open via: website, mobile app, telephone
Rate available until 5pm on 02 May 2024 for new customers and 07 May 2024 for existing customers. Offer may be withdrawn early due to limited availability. Early Closure Charge may apply. The Early Closure Charge will be the lower of the amount of interest earned on your account or 90 days' interest. Must not have subscribed to another cash ISA in the same tax year and you must hold the account solely in your name. Available to new & existing customers. Interest is calculated daily and paid annually to your ISA on the first business day in April and on the Maturity Payment Date.
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State Bank of India – 2 Year Cash ISA Fixed Deposit
Additional account needed
State Bank of India – 2 Year Cash ISA Fixed Deposit
4.65% AER fixed for 2 years
From £1,000
On maturity (compounded annually)
Withdrawals not permitted
Branch
FSCS logo
protected
Open via: branch
Go to site
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OakNorth Bank – Fixed Rate Cash ISA
4.62% AER fixed for 2 years
From £1
Monthly
Instant access (charge applies )
Website, mobile app
FSCS logo
protected
Open via: website, mobile app
Go to site
View details
Furness Building Society – 2 Year Fixed Rate ISA
Furness BS – 2 Year Fixed Rate ISA
4.6% AER fixed for 2 years
From £1,000
Anniversary of account opening
Withdrawals not permitted
Branch, post
FSCS logo
protected
Open via: branch, post
Go to site
View details
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What is a 2-year fixed rate cash ISA?

A 2-year fixed rate cash ISA is a cash ISA that requires you to lock away your savings for a term of 2 years. In return, you’ll receive a fixed rate of interest that will typically be higher than you’d get on an easy access account.

Most 2-year fixed rate cash ISAs won’t allow you to withdraw any funds from your account during the term. If you can take the money out, you will usually pay a penalty fee. This is often a set number of days’ interest. You also won’t usually be able to pay any additional funds into your account once you’ve made your initial deposit, so this type of account is best suited to those with a lump sum to invest.

When comparing 2-year fixed rate cash ISAs, you’ll need to check the minimum deposit requirement. In some cases, it can be a few hundred or a few thousand pounds, so you’ll need to make sure you can meet this requirement or find another option. If you want to transfer in funds from an existing ISA, you’ll also need to check whether your chosen provider permits this. Transfers do not count towards the current year’s ISA allowance.

At the end of the 2 years, your cash ISA will mature and you can usually choose to withdraw your cash or have the money transferred to another ISA.

Do I need a cash ISA?

The personal savings allowance was introduced in 2016 and means that 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.

Because of this, you might be wondering if it’s worth putting your money in a cash ISA – particularly if you’re a basic rate taxpayer. However, keep in mind that at a time when interest rates are rising, if you have a decent amount in your savings pot, you could get closer to reaching your personal savings allowance, which means you’ll start paying tax on your savings interest. By contrast, if you save that money in an ISA, you’ll never pay tax on your savings, no matter how much interest you earn.

For this reason, you might want to put some of your savings in a cash ISA and some in a standard savings account.

How to open an ISA

You can usually open a cash ISA in the same way as any other savings account. Depending on the provider, you might be able to do this online, over the phone, by post or in branch. You will usually need to provide a few personal details such as your name, address and date of birth.

If you’re not an existing customer, you might also have to provide proof of ID, such as a passport or driving licence, and proof of address, such as a bank statement or utility bill. Some digital banks will be able to verify your identity electronically, so you won’t need to provide these documents.

If you want to transfer funds in from another ISA elsewhere, you’ll also need to fill in a cash ISA transfer form, providing details of the ISA you wish to be transferred.

Which are the best 2-year fixed-rate cash ISAs at the moment?

Our best fixed-rate cash ISAs are the highest interest rates available. To get the latest rates, we use Moneyfacts data, which covers nearly the full market of savings products and is checked and updated daily. We don’t include accounts from private banks.

All the cash ISAs in our list have savings protection – for most, this is the Financial Services Compensation Scheme (FSCS). Other schemes include that of NS&I, which is 100% backed by HM Treasury, and the Gibraltar Deposit Guarantee Scheme.

  • State Bank of India – 2 Year Cash ISA Fixed Deposit - 4.65%
  • OakNorth Bank – Fixed Rate Cash ISA - 4.62%
  • Furness BS – 2 Year Fixed Rate ISA - 4.6%
  • Castle Trust Bank – Fixed Rate e-Cash ISA - 4.55%
  • Hodge Bank – 2 Year Fixed Rate Cash ISA - 4.52%

An overview of our 2-year fixed-rate cash ISA comparison

Rates up to 4.65% AER
Number of accounts 74
Minimum investment £1
Opening options Branch, website, mobile app, post, telephone

Pros and cons

Pros

  • Earn a fixed rate of interest for the term of the account
  • Interest rates are usually higher 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
  • It’s not always possible to top up funds during the term of the account
  • You won’t be able to pay in more than your annual ISA allowance
  • If overall interest rates rise, you won’t benefit

Bottom line

If you’ve got a lump sum to invest (that’s less than £20,000) and you are comfortable with leaving those funds untouched for 2 years, a 2-year fixed rate cash ISA is an option worth considering. As well as earning a fixed rate of interest for those 2 years, you won’t need to pay tax on any of the interest you earn.

Just remember that you can only open 1 cash ISA each tax year and you cannot pay in more than your annual ISA allowance of £20,000 unless you’re also transferring funds from another ISA elsewhere.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.

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