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Best 3 year fixed rate cash ISAs

A three-year fixed ISA can be an attractive compromise for savers who want to secure a guaranteed rate for a longer period but don’t want to restrict access to their money for as long as five years. You can see the best 3 year fixed rate ISAs on our chart, which is regularly updated to show the latest top rates.

Moneyfactscompare.co.uk has been providing comprehensive comparison charts to the public for over 25 years, and lists all the latest rates and savings providers from UK banks and building societies. Start your search below using our regularly updated chart:

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Best ISA Rates - 3 Year Fixed

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  • Shawbrook Bank 3 Year Fixed Rate Cash ISA Bond Issue 62
    AER
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    4.42%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    4.42%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • UBL UK 3 Year Fixed Rate Cash ISA
    AER
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    4.41%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    On Maturity
    Further Options ˅
    Go To Provider's Site
    AER
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    4.41%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
    Go To Provider's Site
    AER
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    4.41%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Quarterly
    Go To Provider's Site
    AER
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    4.41%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Aldermore 3 Year Fixed Rate Cash ISA
    AER
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    4.15%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    4.15%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Skipton BS 3 Year Fixed Rate Cash ISA Issue 270
    AER
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    4.00%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    4.00%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Paragon Bank 3 Year Fixed Rate Cash ISA
    AER
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    3.95%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    3.95%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • OakNorth Bank Fixed Rate Cash ISA
    AER
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    3.30%
    Account Type
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    Cash ISA
    Term
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    36 Month Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Hodge Bank 3 Year Fixed Rate Cash ISA
    AER
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    4.41%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
    Further Options ˅
    AER
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    4.41%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Monthly
  • Close Brothers Savings 3 Year Fixed Rate Cash ISA
    AER
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    4.36%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Yearly
  • Cynergy Bank Fixed Rate Cash ISA
    AER
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    4.25%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
  • United Trust Bank Cash ISA 3 Year Bond
    AER
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    4.25%
    Account Type
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    Cash ISA
    Term
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    3 Year Bond
    Interest Paid
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    Anniversary
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What is a three-year fixed rate ISA?

A three-year fixed rate ISA asks you to lock away a lump sum of money for three years, in return for a guaranteed rate of interest. By opening such an account you agree to have no access to your money during the term; if you later decide you need to withdraw funds, you’ll normally have to forego some interest.  

Yet for many savers, the restrictions can be worth it. Unlike variable rate ISAs, it locks in a fixed rate of interest, which means you can secure predictable returns that won’t be impacted by savings rates elsewhere in the market. Plus, the returns are entirely tax-free, which can be a great way to boost your savings pot.

 

How do three-year fixed rate ISAs work?

When you put money in a three-year fixed rate cash ISA, you receive a guaranteed rate of interest for the three-year term. You may be able to choose to have interest paid monthly, annually or on maturity, for example.

Depending on the provider, the minimum initial deposit required could range from £1 to £10,000, with some ISAs allowing you to add to your savings for a limited period after opening. However, other providers may not allow further contributions after the initial deposit.

Because the rate is fixed for three years, you won’t be able to access your money during this period without incurring a penalty. If you do want to withdraw your money or transfer to another ISA, this penalty will usually be a loss of interest.

After three years, the provider should contact you with more information on what will happen to your account. Unless you choose a different option, many providers will simply move your money into a standard variable ISA.

As is the case with any ISA, the ISA allowance means you can only deposit up to £20,000 across one or more ISAs each tax-year. However, the interest you earn is exempt from tax. The tax benefits of ISAs depend on your personal circumstances and may change in the future.

Here are the key features of a three-year fixed rate ISA:

 

  • Fixed interest rate. The major benefit of a three-year ISA is the fixed interest rate, which won’t change during the term regardless of what happens to the wider market. This means that even if rates fall elsewhere, you’re guaranteed to get the returns you expect.

 

  • Tax-free earnings. Fixed rate ISAs can be a great way to maximise your tax efficiency, with all returns being entirely tax-free.

 

  • Limited access. Because you’re locked into a fixed rate, these accounts only allow limited access. Typically, any withdrawals will result in a loss of interest penalty, so will need to be carefully weighed up.

 

  • Interest payout. Three-year ISAs often pay interest yearly or on the anniversary of the account being opened, but you may be able to find options that pay monthly or on maturity as well. Some accounts will pay the interest into a separate linked account, while others will add it to the balance, allowing the interest to be compounded. Find out more about compound interest and how it can boost your savings balance.

 

What happens to my ISA once the three-year term ends?

At the end of the term, your money will be released and you’ll be able to access it without penalty. Your provider should write to you before the end of the term to ask for your instructions, for example you may want to reinvest in into another fixed rate ISA or keep it accessible. If they don’t receive any instructions, the money will normally be automatically transferred into an easy access ISA in their portfolio. However, some providers will reinvest it into another of their fixed products, so make sure to review your options ahead of time so you’re not tied in.

 

Benefits of three-year fixed rate ISAs

Stability and security

The primary advantage of this kind of ISA is that you get a fixed rate of interest for three years, which means you know exactly how much you’ll earn by the end of the term, without needing to worry about rate fluctuations.

 

Risk-free investment

Unlike stocks and shares ISAs, cash ISAs are risk-free, which means you can save in confidence.

 

Tax-free earnings

Money earned from cash ISAs is entirely free of income tax, offering the potential for significant long-term gains. Find out more about how this could benefit you by reading our guide on savings tax.

 

Suitable for medium-term savings goals

If you’ve got a medium-term savings goal – perhaps you’re hoping to buy your first home in a few years and want to save a deposit, for example – a three-year ISA could be ideal. It’s right in the middle between shorter-term ISAs (where you may not receive sufficient returns) and five-year ISAs (which can be too much of a commitment for many savers), offering the perfect compromise.

 

Drawbacks of 3 year fixed rate ISAs

Limited access to funds

You’ll be expected to forego access to your money for the full term, and will be penalised if you need to make a withdrawal. You’ll also rarely be able to add to your principal investment, with few accounts allowing further additions. Instead, if you’re hoping to regularly add to your account, a variable rate ISA or regular savings ISA could be great alternatives.

 

Inflation risk

If inflation were to rise over the three-year period, there’s the risk that it could outpace your returns – reducing the purchasing power of your savings – as your interest rate would remain unchanged. Read our guide to find out more about inflation and how it could impact your finances.

 

Interest rates might be lower than other investments

While the best 3-year ISAs offer competitive rates, you may be able to secure higher returns elsewhere. In recent years short-term ISAs have typically been paying more than their longer-term counterparts, and if you’ve got a higher risk appetite, you’d have the potential for significant long-term gains if you opted for a stocks and shares ISA instead.

 

How do three-year fixed rate ISAs compare to shorter-term ISAs?

Shorter-term ISAs

Short-term ISAs – those with terms of one or two years, or even a few months – can offer a great alternative to three-year deals.

 

  • Interest rates. In the current market, interest rates are often higher on one- and two-year cash ISAs than they are on longer-term options.

 

  • Short-term ISAs can offer greater flexibility as there’s the chance to review your account sooner. However, you’ll still be locked in for the chosen period, with additions rarely allowed and withdrawals typically on payment of a penalty.

 

  • Impact of rate change. Because you’re locking your money away for a shorter period, you’d notice the impact of any rate change much sooner. This can be either positive or negative, depending on which way interest rates go over the term.

 

Impact of interest rate fluctuations on three-year fixed rate ISAs

Interest rates can change a lot over three years, and because you’re locked in for that time, you wouldn’t be able to benefit from any potential rate increases. This means you have the potential to lose out on valuable returns, so it’s important to be comfortable with the term from the outset.

Yet conversely, if interest rates were to fall over the period, you’d end up being far better off, as you’d still be securing the higher rate for longer. It’s all a balancing act and a matter of weighing up the options, and is why keeping an eye on the market – ideally through our chart – can make all the difference.

 

Should I consider fixing for a longer or shorter term?

It’s up to you whether you fix for three years or if you choose a shorter- or longer-term option.

You may want to fix for a shorter-term if you don’t want to lock away access to your money for as long as three years. Also, one-year ISAs and two-year ISAs may pay a higher rate than three-year ISAs which could make them a more attractive option.

However, if you’re concerned that interest rates may fall and you can afford to lock your money away for longer, a four- or five-year ISA may be worth considering as these accounts will pay a guaranteed rate of interest for a longer period.

But it’s worth bearing in mind that, if interest rates rise, you won’t be able to benefit from the higher rates if your money is put away in a long-term fixed ISA (unless you decide the penalty charge is worth incurring to withdraw your money early).

 

Tips for choosing the best three-year fixed rate ISA

Want to know how to choose the best three-year fixed rate ISA? Here are our top tips.

 

Compare interest rates

Finding the best interest rate will likely be your biggest consideration, and comparing the options is key. Looking at the Annual Equivalent Rate (AER) is the best way to do this, as this shows how much interest you’d earn over the year after accounting for any charges, bonuses and compounding. You can use our chart to compare ISAs according to AER – simply click on the “Sort” option and choose “Rate” – and find out more about different rates in our guide.

 

Is there a minimum deposit required to open a three-year fixed rate ISA?

Most accounts require a minimum amount to be deposited, but that amount will vary. Typically, you can expect to see minimum deposits of around £1,000, but they can start from as little as £1 and can rise to £2,000 or more. Make sure to take this into consideration when choosing your account.

 

Understand withdrawal restrictions

Bear in mind that very few accounts – if any – will allow penalty-free withdrawals before maturity. Most will impose a loss of interest penalty, which in some cases can mean you’ll be taking out less than you put in. Note too that you may be expected to have a linked account in order to withdraw funds, and you may have to close the account at the same time. If you think you may need to access funds during the term, it’s worth looking for an account that imposes the minimum amount of withdrawal restrictions.

 

Look at how often interest is paid out

Accounts will typically pay interest annually, but you may be able to find those that pay it monthly or on maturity as well. Earning interest monthly can be particularly beneficial if you want to secure a regular income from a significant savings pot, provided the interest can be paid into another account. Bear in mind that this means you won’t be able to benefit from compounding, and not all accounts allow interest to be paid away, so make sure to factor this into your comparison.

 

Look at the provider's reputation

The reputation of the provider will likely be a key consideration too, and you can find this out by looking at the banking satisfaction survey results from the Competition and Markets Authority (CMA). It’s also worth looking up reviews from current and previous customers, and of course, seeing who has won our coveted Moneyfactscompare.co.uk Awards. Make sure to consider lesser-known challenger banks as well as high street names, as these regularly come out on top in terms of customer satisfaction.

 

What would the estimated balance be after 36 months based on a £1,000 deposit?

Let’s say you wanted to deposit a lump sum of £1,000 into a three-year ISA. If you secured an interest rate of 4.30% AER in an account that compounds interest yearly, you’d be left with £1,134.63 at the end of the term. This equates to your principal amount of £1,000, plus interest of £134.63. Check out our lump sum savings calculator to run through other options.

 

What you need to know about opening an ISA

Ready to take the next step? Here’s everything you need to know about opening and managing a cash ISA.

 

How do I open and manage my account?

Once you’ve compared the options and found your ideal account, the first thing to do is check the eligibility requirements. This includes both standard ISA requirements – such as you’ll need to be 18 or over and a UK resident – and the requirements unique to your chosen ISA. These can include minimum deposits, transfer rules and other opening criteria, such as the requirement for a linked account or mobile app.

If you meet the criteria, the next step is to apply for the account. You’ll see that several accounts on our chart come with links that will take you directly to the provider’s application page, helping streamline the process. Many other accounts will let you apply online too, though a few will ask you to apply via other means (such as in branch or by phone), often building societies that have accounts specifically for their members.

Either way, opening an ISA should be straightforward. You’ll need to provide your National Insurance number and proof of address, and may need to supply additional identification or details of current bank accounts as well. There’ll be an application form to fill in, and if you’re looking to transfer an ISA, you’ll need to provide details of the other account as well. Then you’ll simply need to provide the funds to open your new account, and from there can manage it via any method permitted (typically online or by mobile app, as well as by post, in branch or by phone if applicable).

 

How many days do I have to put money in?

This varies depending on which account you choose. Some expect the full amount to be deposited straight away, while others will allow further additions for a limited period. This is typically for around 14 days, but in some cases will be allowed until a specific date.

 

Can someone else pay into my account?

Not directly. ISA contributions must come from your own bank account, though someone can gift you the money to pay into it, provided the amount is within your own ISA allowance and the account permits further additions.

 

How is interest calculated?

Interest is calculated at the agreed-upon interest rate – the AER – which is essentially a percentage of the amount held in the ISA. Many providers calculate interest daily, but will typically only pay it on a monthly or annual basis, depending on the terms of your account. Note that having interest paid monthly can offer the potential to gain more in the long-run, as the interest will be reinvested and compounded 12 times per year.  

 

Can I transfer an existing cash ISA?

This will depend on the terms of the account, as while many permit transfers of existing ISAs, not all do. It’s important to check the terms and conditions of your preferred account, and read our guide on how to transfer an ISA to find out more.

 

Alternatives to three-year ISAs

As discussed above, you could consider opening a fixed ISA with a shorter or longer term, depending on your preferences.

Alternatively, if you want the option to add to or withdraw from your savings, you could consider an easy access ISA or a notice ISA.

You may also choose to put your money into a standard savings account, instead of an ISA, if you’re not at risk of breaching your Personal Savings Allowance (PSA). Savings accounts typically pay a higher rate of interest than ISAs, but bear in mind that you need to pay tax on your interest if you earn more than your PSA.

 

Three-year fixed rate cash ISA FAQs

Can I withdraw money from my 3-year fixed rate ISA before the term ends?

Yes. All ISAs have to allow some form of access, though this will normally be subject to payment of a penalty, and you may need to transfer to another provider or close the account as well. Note that flexible ISA rules rarely apply to fixed rate accounts.

 

Are there any penalties for early withdrawal?

Yes. This will typically be a loss of interest penalty, sometimes based on how long you have left before maturity, but sometimes it’ll be a set amount. For example, for three-year ISAs it’s often set at 270 days, but can be longer or shorter depending on the provider.

 

What happens to my interest if I withdraw funds before the end of the 3-year term?

If you withdraw your funds before maturity, any interest will be paid less the penalty amount. This can sometimes result in you losing out on interest altogether.

 

Can I transfer to another provider during the term?

Yes, provided your new ISA permits transfers in. Bear in mind that this may still result in a loss of interest penalty. Read more about ISA transfers in our guide.

 

Do I need to inform the bank if I plan to withdraw or transfer money from my ISA?

Yes, particularly if you want to transfer the funds, as there are specific rules you need to follow to ensure you don’t lose your tax advantages.

 

Can I transfer a 3-year fixed rate ISA into a stocks and shares ISA after the term ends?

Yes, as long as your new provider permits transfers from cash ISAs.

 

How often will I receive interest payments on my 3-year fixed rate ISA?

This will depend on the account chosen. Interest is often paid monthly, but it can also be paid monthly or quarterly. Check the terms and conditions of your chosen account, and alongside that, make sure to check whether interest needs to be paid away (i.e. into another account) or can be reinvested to benefit from compounding.

 

Can I set up automatic contributions into my 3-year fixed rate ISA?

No. You’ll typically only be able to make one initial deposit, and will rarely be able to add to your pot afterwards (though some accounts permit further additions for a limited period). This makes automatic contributions redundant.

 

Is there a limit on how much I can deposit each year into my 3-year fixed rate ISA?

Yes. As with all ISAs, you’re limited to depositing a maximum of £20,000 per tax-year, as per standard ISA rules. This is known as your ISA allowance.

 

Are there any fees associated with managing an ISA?

You normally won’t have any fees to pay with a cash ISA, though the same cannot be said for stocks and shares ISAs, where you’ll typically be expected to pay things like annual management charges and platform fees.  

 

What is the tax treatment of interest earned in a 3-year fixed rate ISA?

Any interest earned in your three-year ISA will be paid free of income tax, and you won’t need to declare it on your tax return. 

 

What should I do if I change my mind about my 3-year fixed rate ISA?

Some providers will give you a “cooling-off period”, typically seven or 14 days, during which time you can close the ISA if you change your mind. However, this isn’t always the case, and you may still be held to withdrawal and closure penalties. Make sure to speak to your provider if this is the case.

 

How can I track the growth of my 3-year fixed rate ISA?

You’ll normally be able to track the growth of your ISA by viewing your account online (if you have internet or mobile banking), or through any regular statements provided by your bank. This will show when interest is paid into the account.

 

What happens if I move abroad during the 3-year term? Can I keep my ISA active?

If you move abroad and become a non-resident, you won’t be able to pay any money into your ISA. However, you can keep it open to maintain the tax benefits, and can transfer it to another provider if you wish. You can then pay into it again if you return to the UK.

 

Can I have multiple 3-year fixed rate ISAs with different providers at the same time?

Yes. There’s now no limit to the number of fixed rate ISAs you can open in a year, though you’re still bound by standard ISA allowance rules, and some providers have their own restrictions in place. Find out more in our guide “How many ISAs can I have?”.

 

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Leanne Macardle

Freelance Contributor

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