Best 3 Year Fixed Rate ISAs | Rates Up To 4.31%

Depositor Protection

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.

Disclaimer

All rates subject to change without notice. Please check all rates and terms before investing or borrowing.

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Three-year fixed rate cash ISAs explained

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.

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).

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.