Best 1 Year Fixed Rate ISAs | Rates Up To 4.61%

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Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme (FSCS) up to a maximum level of protection of £85,000 per person per institution. All new savings or bank accounts provided to UK customers are now covered by the FSCS.

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One-year fixed rate cash ISAs explained

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

Because the interest rate on a one-year ISA is fixed, it means you’re guaranteed to receive that rate for the whole term.

However, in return, you won’t be able to withdraw money from the one-year ISA before the end of the term without some kind of penalty, such as a loss of interest. This penalty will also apply if you want to transfer your money to another ISA.

Some providers may not allow you to make any further deposits into your one-year ISA after your opening deposit, while others may allow further contributions for a limited period.

Once the one-year term comes to an end, the provider should contact you with further instructions. If you do nothing, the money will typically move into a standard variable ISA.

As with any ISA, the interest you earn on a one-year fixed ISA is exempt from tax.

Everyone has a £20,000 ISA allowance that they can deposit in ISAs each tax-year. This allowance refreshes at the start of the tax-year and savers can choose to deposit their full allowance in one account or spread it across multiple ISAs.

Is a one-year fixed ISA right for me?

You may want to consider a one-year fixed rate ISA 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 may not be right for you if you want to be able to access your savings to cover an emergency expense, for example, or if you want to gradually add to your savings over time.

Alternatively, some savers may prefer to lock in a guaranteed rate for a longer period if they don’t need access to their money.

While a longer-term fixed ISA may not necessarily pay as high a rate as a one-year ISA, you’re guaranteed to receive that rate for a longer period. This means that, if rates fall, 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, if rates rise, you could miss out on higher interest rates if your money is locked into a longer-term ISA.

Alternatives to one-year ISAs

If a one-year cash ISA isn’t for you, there are some alternatives you could consider.

For example, if you want to put your money away for a longer period, there are two-year ISAs and three-year ISAs available. Or, if you’re sure you won’t need to access your money in the near future, there are five-year fixed ISAs on the market too.

Alternatively, there are shorter-term fixed ISAs available with terms of up to one-year if you want a guaranteed rate but don’t want to lock away your money for one year.

If you prefer to have the option of accessing your money, you could consider an easy access ISA or a notice ISA. These ISAs allow you to add to your savings and make withdrawals as you choose, although you need to give the provider a specified amount of notice before you can withdraw from a notice ISA. Note that the interest rate on these ISAs is variable, which means the provider can increase or decrease it as they choose.

With these ISAs, it’s important to check whether withdrawals and further deposits would affect your ISA allowance. Read more about this in our guide to flexible ISAs.

If you’re not worried about being taxed on your savings interest, you may want to consider a one-year bond or a standard savings account as these typically pay higher rates than their equivalent ISA product.