Everything you need to know about fixed rate ISAs

 

Fixed rate cash ISAs tend to pay higher rates of interest than easy access or notice ISAs, and unlike with a variable rate account, the interest rate cannot change during the fixed term.

Make sure you can commit your money for the full term, as early access will usually result in a hefty penalty and sometimes also closure of the account.

In a similar vein, not all accounts will allow you to add funds after opening or accept transfers in from existing ISAs, so check the restrictions before you commit.

You can hold more than one cash ISA at a time, but you can't open more than one per tax year.

You can only invest up to the maximum ISA allowance per tax year, but it is possible to transfer funds from previous years without limit.

Tax advantages will depend on your individual circumstances and may change in the future.

You'll want to pick the term of your ISA based on when you may want access again. If you think rates will rise in the near future, you may want to go for a one-year ISA, whereas if rates are likely to go down, you’ll want to secure your rate for as long as possible.

Once you've picked a term, all that's left is to compare fixed rate ISAs on the basics: rate, investment limits, accessibility and account management options. Remember that the best rate ISA isn't automatically the most suitable for you, depending on its other features.