Best 1 Year Fixed Rate Cash ISAs

One-year fixed rate cash ISAs explained

How does a one-year fixed rate cash ISA work?

One-year fixed rate ISAs are a type of Individual Savings Account (ISA) that pay a fixed rate of interest for one year.

What ‘fixed rate’ means

‘Fixed rate’ simply means the interest rate is guaranteed to remain the same over the course of a term; in the case of a one-year fixed ISA, the rate won’t change for 12 months (or until the date specified by a provider).

This is in contrast to variable rate accounts, such as an easy access or notice ISA, where the interest rate can go up or down with little warning.

Deposit limits and rules

One-year fixed rate cash ISAs follow many of the same rules as other types of ISAs:

• Deposits into a one-year cash ISA count towards your £20,000 annual ISA allowance. While you could allocate your entire allowance to a single account, you can also spread it across multiple different ISAs.

• New rules introduced in April 2024 mean there is no limit on the number of cash ISAs you pay into within a single tax-year – providing you don’t exceed your annual allowance.

• In return for receiving a guaranteed interest rate, you won’t be able to access your money in a one-year fixed ISA before the term ends without facing some kind of penalty – such as a loss of interest. This penalty also applies if you want to transfer your money to another ISA.

How long do I have to deposit money into a one-year fixed rate cash ISA?

Some providers may not allow you to make any further deposits into your one-year ISA after your opening deposit, while others will allow further contributions for a limited period. For more information, select ‘view further details’ next to a listing on our chart.

How is interest paid on a one-year fixed rate ISA?

Interest earned from a one-year ISA can be paid at regular intervals (such as daily, monthly, quarterly or yearly) or when the fixed term comes to an end (also known as receiving interest ‘on maturity’) – just the same as other types of savings account.

Some banks and building societies also offer the choice of having interest paid away or compounded; the former is where any returns are paid into a nominated account, while compound interest remains in the account and will go on to earn interest itself.

As well as the best 1-year fixed ISA rates, you can use our chart above to find out product-specific information.

Who can open a one-year fixed rate cash ISA?

Any UK citizen aged 18 or over, as well as crown servants, members of the armed forces and their spouse or civil partner, can open a one-year fixed rate cash ISA. To apply for this type of account, you may be asked to supply the following:

• Proof of address and identity
• National Insurance number
• Contact details, such as mobile phone number and email address
• A minimum deposit (details of which can also be found by selecting ‘view further details’ on our chart).

Depending on the provider, one-year ISAs can be opened and managed online or via mobile app. Alternatively, some can be operated by more traditional means such as by post, over the phone or by visiting a branch. While there’s no limit on the number of ISAs you can open within a single tax-year, take care not to breach your £20,000 allowance.

Can I open a one-year fixed ISA with a joint account?

No, you can’t open a joint one-year fixed rate ISA because these accounts and their tax benefits are linked to a sole account holder.

Two or more people wanting to save together will either need to each open their own ISA or opt for a joint savings account.

Benefits of a one-year fixed rate cash ISA

There are some advantages to a one-year ISA which may appeal depending on your savings goals and personal circumstances:

Tax-free interest

As with any ISA, the interest you earn on a one-year fixed ISA is exempt from income tax. In contrast, you may be taxed on interest earned from a traditional savings account or fixed bond if you exceed your Personal Savings Allowance (PSA). The tax benefits of ISAs depend on your personal circumstances and may change in the future.

Security and stability

Securing a competitive fixed rate could protect against fluctuations in the savings market as, even if interest rates were to trend downwards, you’d still receive the same returns.

Short-term flexibility

With a one-year fixed rate cash ISA, your money is locked away for a shorter period of time compared to longer-term fixed ISAs, so you’ll regain access to your cash sooner.

Of course, if you need to make a withdrawal in the meantime, many fixed ISAs permit early access subject to a loss of interest penalty and/or account closure. Again, details of this can be found on our chart by ‘viewing further details’.

Considerations before opening a one-year fixed rate cash ISA

Before applying for a one-year ISA, however, be sure to consider all factors:

Interest rates and market conditions

When comparing accounts, keep in mind the best 1-year fixed ISA is likely to be that which offers the most competitive rate while meeting any other requirements you may have. Ideally, this should be above the current rate of inflation to see your money grow in real terms.

But, although a fixed ISA could safeguard against falling interest rates, remember you could be left out of pocket if typical returns were to rise above the point at which you locked in.

Furthermore, if the rate of inflation rises higher than that paid by your one-year fixed ISA, you could end up losing money in real terms.

What happens at the end of the term?

Once the one-year term comes to an end, your provider should be in contact with further instructions. You may be offered the choice of renewing your fixed ISA or moving to a variable rate ISA with your current provider. Alternatively, you could consider transferring your ISA to another provider, or withdrawing the funds and closing the account.

If you do nothing, your money will typically be moved into a standard variable ISA.

Early withdrawal penalties

Although some one-year fixed ISAs permit early access subject to a loss of interest penalty, if it’s likely you’ll dip into your saving pot, it may be easier and more cost-effective to opt for an easy access or notice ISA instead.

What’s happening with one-year fixed rate ISAs?

Typical returns on a one-year fixed ISA have fallen steadily as a result of the Bank of England lowering the UK’s central interest rate five times since last summer. Also known as the base rate or bank rate, this is the amount the Bank of England charges commercial banks to borrow money which, in turn, influences the mortgage and savings rates they offer customers.

Like the rest of the savings market, one-year fixed ISA rates rose rapidly in response to the Bank of England hiking the base rate 14 consecutive times between December 2021 and August 2023 as it looked to tame rampant inflation by promoting saving and discouraging spending. However, inflation has since cooled significantly from a recent peak of 11.1% (recorded in October 2022) which paved the way for the UK’s central bank to make cuts.

That being said, it’s important to remember fixed rates are less acutely affected by changes to the base rate compared with variable rates. This is because providers usually consider market forecasts pre-emptively when setting their fixed prices, alongside a range of other factors.

Is it worth using an ISA or should I just pay tax on my savings?

An ISA may especially be worth considering if you hold substantial deposits in your savings accounts and/or a higher- or additional-rate taxpayer.

The Personal Savings Allowance (PSA) enables basic-rate taxpayers to earn up to £1,000 in interest from their savings without paying tax; while this is sufficient for many savers, higher interest rates over recent years has put many at risk of exceeding their allowance.

That being said, ISAs often (but not always) pay less than traditional savings accounts, so it’s worth weighing up the tax benefits versus the potential for higher returns.

Furthermore, not all banks and building societies offer ISAs, so you may find more choice when opting for a traditional savings account.

How to choose the best one-year fixed rate cash ISA

While it’s crucial to secure the best returns on your hard-earned cash, it’s also important to find an account that meets your needs and requirements. Below, we list some of the factors that could help you compare one-year fixed rate ISAs:

Interest rate comparison

Perhaps the first thing you should consider is whether an account offers a competitive interest rate; ideally, it needs to pay above the current rate of inflation for your money to have an opportunity to grow in real terms.

Whereas variable rates tend to rise and fall in line with changes to the Bank of England base rate, a provider will typically use forecasts for the future direction of the savings market to determine its fixed pricing. For instance, if there are expectations for the Bank of England to reduce the UK’s central interest rate in the months ahead, you may see one-year fixed ISA rates start to decline pre-emptively.

Related guide: UK base rate explained and how to respond to changes

Consumer demand can also influence rates; the weeks leading up to the end of the tax-year on 5 April, for example, is often a popular time for providers to raise returns or launch attractive new products as many savers look to maximise their ISA allowance before it resets.

Related guide: What is ISA season and why does it matter for your savings?

Other key features to look out for

• Bonuses: Where an account’s headline rate is inclusive of an introductory bonus, it’s important to check whether you’re still receiving competitive returns once the offer expires. If not, you may want to consider transferring your ISA to another bank or building society (but bear in mind this could incur a loss of interest penalty if transferring a fixed ISA).

• Accepts transfers in: While all providers must allow ISAs to be transferred out, they are not obliged to accept transfers in. If you have money in an existing ISA you’re looking to transfer to a one-year fixed ISA, you can check what types of ISA (if any) a particular provider accepts transfers from by selecting ‘view further details’ on our chart.

• Flexible rules: Flexible ISAs let you replace any withdrawn funds without it counting towards your annual ISA allowance. However, this feature may be less necessary in a one-year fixed ISA, as most either prohibit contributions entirely or only accept further additions for a short window of time.

Reputation and customer service

Although it may be tempting to stick with a more familiar brand, some of the best one-year ISA rates can often be found from lesser-known challenger banks.

Unlike the UK’s biggest high street banks (which are longer-established and can rely on a loyal customer-base), these smaller retail banks will often offer more competitive rates to drive deposits and build brand awareness.

You can rest assured that all the providers listed on our charts are subject to the same FSCS protection as some of the UK’s biggest banks and building societies.

Is a one-year fixed rate cash ISA a good option for short-term saving?

A one-year cash ISA could be a good option if you have a savings goal you’re looking to accomplish in 12 months’ time – if you’re looking to grow a lump sum to put towards the cost of a wedding, holiday or car, for example.

But, if you’re saving towards an even shorter-term goal, you may be better off with a less than one-year fixed ISA or even an easy access ISA.

Can I have more than one fixed-rate ISA with different providers in the same year?

Yes, it’s possible to have more than one one-year fixed rate cash ISA within a single tax-year. In fact, it could help to have separate savings pots for different goals.

While it used to be the case you could only open and pay into one cash ISA per tax-year, this rule changed following the 2023 Autumn Budget so that, since the start of the 2024/25 tax-year, you can subscribe to as many cash ISAs as you wish. You could hold ISAs with different providers, for instance, or open multiple accounts with your existing bank or building society (although some may impose their own restrictions).

But, when paying into multiple ISAs – especially with different providers – it’s important to track your deposits carefully and take care not to exceed your annual £20,000 ISA allowance.

Related guide: How many ISAs can I have?

Is a one-year fixed ISA right for me?

A one-year fixed rate ISA could be a good choice if:

• you’re confident that you won’t need to access your savings for 12 months
• you want to avoid paying tax on your savings interest
• you have a lump sum to deposit
• you want to lock in a guaranteed rate for one year.

However, a one-year ISA might not be suitable if:

• you want to have access to your savings to cover an emergency expense
• you want to gradually add to your savings over time
• you want to lock in a guaranteed rate over a longer period.

Think a one-year ISA is right for you? Discover the best rates using our chart above to get started.

Should you consider a longer-term fixed ISA?

While recent economic uncertainty means some of the top one-year fixed ISAs currently outperform their two-, three- and five-year counterparts, longer-term ISAs historically offered better returns as a means of compensating savers who are more at risk of their money losing value to inflation over time.

But, while the interest rate is a key factor to consider when choosing an account, ultimately the length of time you lock in a fixed rate for will depend on your savings goals and for how long you’re comfortable to forgo access to your cash.

What’s more, even if a longer-term ISA offers a less competitive rate, keep in mind you’re guaranteed to receive that rate for a longer period of time. If rates fall, this means you could end up earning more interest than if you had taken out a one-year ISA and then looked for a new fixed ISA at the end of the term.

On the other hand, you could miss out on higher returns if you lock away your money in a longer-term ISA and rates were to rise.

What is the best 1-year fixed rate ISA?

The best one-year fixed rate ISA will usually be the account that offers the highest returns while meeting any other needs you may have. That’s why it’s important to consider all features before settling on an account - not just the interest rate.

For example, if there’s a chance you’ll need to withdraw cash from your fixed ISA before the term ends, you may prefer an account that imposes a more lenient loss of interest penalty for early access. Those wanting the option of adding to their pot, meanwhile, could look for an account that accepts deposits for the longest window from opening.

When interest will be received is another important factor to consider; savers wanting to supplement their regular income with interest earned from their fixed ISA could opt for an account that pays interest monthly.

All of this information can be found on our chart above; simply select ‘view further details’ next to a listing on our chart to compare the best 1-year fixed rate ISAs.