18 Month Fixed Rate Cash ISAs

What is an 18-month fixed rate ISA?

An 18-month cash ISA is simply a type of fixed ISA that pays a fixed rate for 18 months. This means the interest rate won’t change for this period, giving you a guaranteed return on your money.

As with other ISAs, the interest earned is exempt from income tax.

How an 18-month fixed rate ISA works

After opening an 18-month cash ISA, you will need to add money to your account.

Depending on the provider, you may only be able to make one deposit when you open the account, but others may allow further additions for a limited period.

Bear in mind that you can only deposit a maximum of £20,000 across one or more cash ISAs in a single tax-year.

In return for receiving a guaranteed rate, you typically won’t be able to withdraw from your savings (or transfer to a different ISA) during the 18-month period without incurring some form of penalty.

At the end of the 18-month term, the provider will often move your money into a standard variable ISA or other type of ISA unless you request otherwise.

What do I need to open an 18-month fixed rate ISA?

To open an 18-month cash ISA, you need to be a UK resident aged 18 or over. Crown employees and members of the armed forces serving abroad (and their spouses or civil partners) are also eligible to open an ISA.

When applying, you need to tell the provider some key details, such as your:

• name
• address
• date of birth
• National Insurance number
• current account details
• contact information.

If you’re transferring in from another ISA, you’ll also need to give the provider the details of this account.

How can I manage my account?

The way you can manage your 18-month ISA depends on the provider.

For example, you may be able to manage it online, via mobile app, by phone, in branch or by post. Some providers offer multiple management methods while others may only offer one.

You can see the different ways you can manage each ISA on our chart.

What is the minimum deposit required to open an account?

Minimum deposit requirements vary between ISAs and providers.

You may be able to open some 18-month cash ISAs with as little as £1 but others may ask for several thousand pounds.

Click “view further details” next to an account on our chart to see the minimum deposit required.

Are there any other requirements?

As well as the requirements of an individual account, it’s important to think about the general terms and conditions of opening an ISA, particularly your annual ISA allowance.

While you can have and open multiple cash ISAs within the same tax-year, you can only pay in a maximum of £20,000 across all your ISAs.

So, if you’re saving into one or more ISAs alongside an 18-month ISA, make sure you keep track of how much you deposit in all of these accounts.

Should I consider fixing for a longer term?

It’s up to you to decide whether an 18-month ISA is right for you or whether you should fix for a longer term.

18-month ISAs may be appealing if you want to secure a guaranteed rate but you’re not comfortable locking away your money for an extended period.

However, if you have enough savings in an easy access account that can act as a financial cushion, for example, and you have a sum of money that you’re confident you won’t need, it may be worth considering a longer-term fixed ISA.

A longer-term ISA will pay a guaranteed rate of interest for a longer period, which could be appealing if savings rates drop.

But, on the other hand, putting your money into a long-term ISA could mean you miss out on higher-paying accounts if interest rates rise.

Alternatives to 18-month ISAs

Instead of an 18-month ISA, you may want to consider a one-year ISA or two-year ISA, which are more common products. As a result, you’re likely to have more accounts to choose from and may be able to secure a more competitive rate than if you only looked at 18-month ISAs.

If you want a fixed ISA with a longer term, you could also consider a three- or five-year fixed ISA.

Alternatively, if you want the option to dip into your savings, easy access ISAs or notice ISAs could be suitable options.

You may also want to look at standard savings accounts, such as an 18-month bond, instead of ISAs as you may find these pay higher rates.

However, it’s important to bear in mind that you will need to pay tax on any interest you earn from your savings if you earn more than your Personal Savings Allowance (PSA). By contrast, you don’t need to pay any tax on interest you earn on ISAs.

The tax benefits depend on your personal circumstances and may change in the future.