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Best 5 Year and Longer Fixed Rate ISAs

Savers who are willing to lock their money away for a longer period could consider a five-year fixed rate ISA. While they may pay lower rates than shorter-term ISAs, the rate is guaranteed for five years which can be appealing to savers unsure about the direction of interest rates in the future.

Moneyfactscompare.co.uk has been providing comparison charts to the public for 25 years; use our chart below to compare the best five-year fixed rate ISAs.

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Best ISA Rates - 5 Year Fixed

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  • Shawbrook Bank 5 Year Fixed Rate Cash ISA Bond Issue 58

    Shawbrook Bank 5 Year Fixed Rate Cash ISA Bond Issue 58

    AER
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    4.12%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    4.12%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Chetwood Bank HL Active Savings - 5 Year Fixed Rate Cash ISA

    Chetwood Bank HL Active Savings - 5 Year Fixed Rate Cash ISA

    AER
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    4.05%
    Account Type
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    Cash ISA
    Term
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    30.04.30
    Interest Paid
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    Yearly
    Go To Provider's Site
  • Leeds BS 5 Year Fixed Rate Cash ISA (Issue 156)

    Leeds BS 5 Year Fixed Rate Cash ISA (Issue 156)

    AER
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    4.00%
    Account Type
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    Cash ISA
    Term
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    03.06.30
    Interest Paid
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    Yearly
    Go To Provider's Site
  • Hampshire Trust Bank 5 Year Online ISA Fixed Saver (Issue 2)

    Hampshire Trust Bank 5 Year Online ISA Fixed Saver (Issue 2)

    AER
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    3.75%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    Anniversary
    Go To Provider's Site
  • Paragon Bank 5 Year Fixed Rate Cash ISA

    Paragon Bank 5 Year Fixed Rate Cash ISA

    AER
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    3.65%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    Anniversary
    Further Options ˅
    Go To Provider's Site
    AER
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    3.65%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    Monthly
    Go To Provider's Site
  • Close Brothers Savings 5 Year Fixed Rate Cash ISA
    AER
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    4.30%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    Yearly
  • Hinckley & Rugby BS 5 Year Fixed Rate Cash ISA - Issue 11
    AER
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    4.25%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    Yearly
  • UBL UK 5 Year Fixed Rate Cash ISA
    AER
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    4.11%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
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    On Maturity
    Further Options ˅
    AER
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    4.11%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
    Press for help tip
    Anniversary
    AER
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    4.11%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
    Press for help tip
    Quarterly
    AER
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    4.11%
    Account Type
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    Cash ISA
    Term
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    5 Year Bond
    Interest Paid
    Press for help tip
    Monthly
  • Nottingham BS 5 Year Fixed Rate Cash ISA 12
    AER
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    4.10%
    Account Type
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    Cash ISA
    Term
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    30.06.30
    Interest Paid
    Press for help tip
    Yearly
  • Nottingham BS 5 Year Fixed Rate Cash ISA 229
    AER
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    4.10%
    Account Type
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    Cash ISA
    Term
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    30.06.30
    Interest Paid
    Press for help tip
    Yearly
Depositor Protection

Eligible deposits with UK institutions are protected by the FSCS up to £85,000 per person per institution. Covers all new UK bank and savings accounts for UK customers.

Disclaimer

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

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Five-year fixed rate cash ISAs explained

Five-year fixed rate ISAs are an option for savers who have a lump sum of money that they know they won’t need to access for at least five years.

The interest rate won’t change during the five-year term, and, in return, you won’t be able to withdraw any money from your account (or transfer to another ISA) without incurring a penalty. This is in direct contrast to variable rate ISAs, which don’t always impose a penalty for withdrawing money (though make sure to check the terms of access), but can also change the interest rate at any time. The security of having a fixed rate can therefore be preferable for many savers.

Yet because it’s a big commitment to lock your money away for this length of time, it’s important to think carefully about how much you deposit. This is particularly significant if the provider only allows you to make one deposit upon opening the account with no option to make further contributions.

When the five-year term is about to end, the ISA provider should contact you with some next steps. If you do nothing and don’t give any alternative instructions, the provider is likely to move your money into a standard variable ISA once the fixed term ends.

As with any ISA, you don’t pay income tax on any interest you earn. Bear in mind that your ISA allowance means you can deposit up to £20,000 in total across one or more ISAs each tax-year, and that tax benefits depend on your personal circumstances and may change in the future.

 

What would the estimated balance be after 60 months on a £1,000 deposit?


Here’s an example of how much you may be able to earn on a five-year ISA based on current interest rates:

A deposit of £1,000 at a fixed rate of 4.20% AER that compounds annually would generate an estimated balance of £1,228.40 in five years, of which £228.40 would be interest. (This is for illustrative purposes only.) You can run more examples by using our lump sum savings calculator, and find out more about AER and how compounding works by reading our guides.

 

Can you withdraw money from a five-year fixed rate cash ISA?

Yes, though this will come at a cost. You’ll likely be subject to an early access penalty for making a withdrawal or for any other form of early access (such as transfers away from the account) which will normally be loss of interest. Bear in mind that this can be significant – many accounts impose penalties of around 365 days’ worth of lost interest, but some can be higher – and can have a huge impact on the amount of interest you’ll earn, so it’s vital to weigh up your options before looking to access funds.

 

Can I add more money to my five-year fixed rate cash ISA during the term?

Some cash ISAs will permit further additions for a limited period, typically for 14 days or while the particular issue remains open. However, after this time you won’t normally be able to add more money to the account, which means you’ll need to be comfortable with your deposit from the outset.

 

Moneyfacts tip Image of Leanne Macardle

If you want to make regular deposits, you may want to consider a variable rate ISA, or even a regular savings ISA instead.

Can I transfer my existing ISA into a 5-year fixed rate ISA?

This will depend on the provider, as while ISA transfers are technically allowed, not all accounts will permit it. Always check the terms and conditions of your preferred account or speak to your provider if you’re unsure, and remember to follow the specific ISA transfer rules so you don’t lose out on any tax advantages.

 

What happens when my five-year fixed rate cash ISA matures?

On maturity of your ISA, you’re free to withdraw the money – including both the principal amount and any interest earned – and move it to wherever you see fit. This could be to another ISA, or simply to your current account before deciding what to do with it. However, you’ll need to let your provider know ahead of time what your wishes are, otherwise they’ll move the money into another one of their products.

 

Pros and cons of five-year ISAs

  • The rate won’t change during the five-year term, which means the return on your money is guaranteed.
  • If rates fall, you could be better off than if you locked into a shorter-term ISA.
  • You won’t pay tax on the interest you earn.
  • You won’t be able to withdraw money from your ISA or transfer to a new ISA provider without some form of penalty.
  • If interest rates rise, your money could be locked into an account paying a relatively low rate.
  • The maximum you can deposit in ISAs each tax-year is £20,000.

Key features to look for in a 5-year ISA

When choosing a five-year ISA, there are several features you need to consider. These include:

  • Interest rate. The rate you’re getting is arguably the most important consideration of all, as this will determine how much interest you’ll earn. You want to ensure your money is working as hard as possible so it’s important to compare rates thoroughly, and bear in mind that even small differences can have an impact on the amount you’ll have left at the end of the term, particularly if you’re saving a large sum.

 

  • Minimum and maximum deposit. Make sure to check the deposit requirements, as some ISAs may have higher minimum deposit amounts than others. For example, minimum deposits of £1,000 are fairly standard in this sector of the market, but some accounts will let you deposit as little as £1 and others expect at least £10,000, so always confirm that the requirements suit your needs.

 

  • Withdrawal restrictions. All five-year ISAs have to allow access of some kind. Transfers are always allowed, but not always direct withdrawals (you may need to transfer the amount to a variable rate ISA first), yet any form of access will be restricted and can result in a penalty. This will usually come in the form of loss of interest, and you may be expected to close or transfer the account as well.

 

  • Auto-renewal options. It’s important to check what will happen at the end of the five-year term. If you don’t provide specific instructions many providers will transfer the funds into a variable ISA, but some may auto-renew into another fixed rate account, so make sure to be aware and provide the necessary information.

 

How long should I fix my ISA for?

It’s impossible to know what the future holds so, if you suffer a financial shock such as losing your main source of income or needing to pay a major unexpected expense, having all your savings tied up in a long-term fixed ISA may not be ideal.

This is why it’s important to not lock all your savings away in a five-year ISA, and instead put aside some of your money in an easy access account that you can use in an emergency.

But, if you have sufficient money in savings that you can draw on at short notice, it’s up to you to decide whether you put any additional money in an ISA with a shorter or longer fixed term.

A shorter-term ISA may be more suitable if you think you’ll need to use your money in the near future, or if you’re not comfortable locking away access for as long as five years.

However, if you’re confident that you can lock away and forget about a sum of money for five-years, it may be worth considering a longer-term ISA.

For many people, it may be a good idea to consider splitting your money across easy access, short-term and long-term ISAs to cover all eventualities.

 

Moneyfacts tip Image of Leanne Macardle

Saving for a first home or retirement? You may want to consider a Lifetime ISA, which offers a Government bonus of 25% on top of any eligible deposit.

How to apply for a 5-year fixed rate ISA

Ready to apply for a 5-year ISA? There are several steps to follow to make sure it runs smoothly, leaving you with the ideal product for your needs. Here’s everything you need to know about how to open a fixed rate ISA.

 

Step one – check your eligibility

Each account will have its own criteria, and it’s important to make sure you’re eligible ahead of time. Standard eligibility criteria will include things like age (you’ll need to be 18 or over) and location (you must be a UK resident, or a Crown servant or their spouse/civil partner), and you’ll need to make sure you can commit to minimum deposit requirements too.

Some providers may expect you to be a pre-existing customer as well, particularly if they’re offering exclusive or loyalty rates, where you’ll often be required to have a linked current account. Others may simply ask you to have what’s known as a holding account, from where any ISA-related transactions can be made. Make sure to check the provider’s rules on multiple ISAs as well, as not all will allow you to have more than one cash ISA product with them in the same tax-year.

 

Step two – gather your documents

The next step is to gather any information you’ll need to show the provider when making your application. This can include your National Insurance number, proof of address and identity, and details of any other ISAs you hold (particularly if you’re planning on making an ISA transfer) and/or current accounts (if you need to provide a linked account).

Proof of identity can include your passport or photo driving licence, and for proof of address you can use documents such as an up-to-date utility bill or bank statement. You’ll need to provide photocopies of any required documents and, in the case of identification, you may need a third party to certify it as well. Note that if you already hold a product with the provider, you may not need to supply as much information, but always make sure to check.

 

Step three – submit your application

The final step is to complete an application form with the provider. This can often be done online and will normally be a seamless process, and if you want to make sure it’ll be a pain-free experience, you can specifically search for products that have achieved an Easy to Open rating in our chart above. Note that some accounts ask you to apply via other means – building societies in particular may ask you to apply in branch or by post – but will normally expect the same kind of form to be completed.

Once your application has been approved you can open the account with your initial deposit, and can manage it via any means offered by the provider.

 

Who is offering the best 5 year fixed rate ISA?

This isn’t an easy question to answer, as the best 5 year ISA rate can change daily, if not hourly, which means it’s vital to compare the options thoroughly when you’re ready to find a new deal. You can use our chart to search according to rate, and from there you can check the eligibility requirements to make sure it’s going to suit your needs.

Bear in mind that the very best 5 year ISA available may not be right for you – it could have higher deposit requirements than you’re comfortable with, for example, or may expect you to be an existing customer – so don’t overlook options slightly further down the list.

 

Moneyfacts tip Image of Leanne Macardle

The top deals are rarely offered by high street brands, and in fact, it’s often smaller banks that offer the best rates. Find out more about challenger banks and why you should consider them.

Alternatives to five-year ISAs

If a five-year ISA is slightly too long to lock away access to your money, you could consider a four-year ISA or a three-year ISA.

Or, for an even shorter-term, one-year ISAs and two-year ISAs are popular options among savers as they can pay competitive rates of interest.

If you want an account that allows you to access your savings when needed, you could consider an easy access ISA or a notice ISA.

Alternatively, instead of an ISA, you could also look at a standard savings account. There are easy access accounts, notice accounts and fixed rate bonds to choose from, but it’s worth noting that you would need to pay tax on any interest you earn above your Personal Savings Allowance (PSA).

By contrast, any interest you earn on money deposited in an ISA is exempt from tax.

Five-year fixed rate cash ISA FAQs

Are five-year fixed rate ISAs tax-free?

Yes, five-year fixed rate ISAs are entirely free from income tax, which means any interest earned doesn’t count towards your Personal Savings Allowance, and doesn’t need to be declared to HMRC. Find out more about how your savings are taxed to see how ISAs can benefit you.

 

Is it possible to have more than one five-year ISA?

Thanks to recent rule changes, you can now have as many five-year ISAs as you like to suit your circumstances, provided you don’t subscribe more than £20,000 per year across your ISA portfolio. Find out more in our guide: How many ISAs can I have?

Can you lose money on a fixed rate ISA?

Generally, no. Because you’re saving in cash and getting a guaranteed rate of interest, you can’t lose any money on a fixed rate ISA, provided you have less than the FSCS limit held with the provider. However, it’s important to note that the purchasing power of your cash could reduce if inflation rises over the term, and if you make an early withdrawal, there’s the chance that you could get back less than you initially deposited once early access penalties have been factored in.

 

Is a variable or fixed rate 5 year ISA better?

Variable ISAs don’t specify a term, but if you wanted to save for five years, there’s nothing to stop you from opening a variable rate ISA and saving accordingly. Just bear in mind that the rate could change within those five years, which could work out positively or negatively depending on which way the market goes. If you’d rather have rate security, a fixed rate five-year ISA may be for you.

 

Is a five-year fixed rate cash ISA classed as an investment?

Cash ISAs aren’t generally classed as investments, as the money is held in cash rather than invested on the stock market. For it to be a true investment, you’d be looking at a stocks and shares ISA instead, which is an investment vehicle within an ISA wrapper.

 

What happens if interest rates rise after I've locked into a five-year fixed rate ISA?

If interest rates rise over the five-year term, your rate will remain unchanged. This means that you could end up earning a lower rate than the market average, but you’ll still be left with the same amount of interest as initially expected.

 

Is it better to open a fixed rate ISA now or wait for better rates?

This is a very personal decision. There’s no guarantee what’s going to happen to interest rates in the future, which means waiting could mean you actually miss out on a higher rate now. It all comes down to your risk appetite and prediction of where you think rates are heading, making sure to consider the current environment and wider predictions of base rate changes.

 

Can I open a five-year fixed rate cash ISA in joint names, or is it for individuals only?

No. Cash ISAs can’t be in joint names and can only be opened by individuals, thereby making sure the taxation rules are adhered to.

 

Can I use a five-year fixed rate ISA as part of my loan or mortgage application?

No, ISAs cannot be used as security for any form of borrowing. If you need the money to advance your application, you’d need to withdraw it and deposit the funds elsewhere. Likewise, any interest earned from your ISA wouldn’t count as income for mortgage application purposes.

 

What happens to my five-year fixed rate ISA if I move abroad during the term?

If you move abroad during the term you can keep it open to benefit from the tax advantages.

 

Do five-year fixed rate ISAs have any impact on my credit score?

No, cash ISAs have no impact on your borrowing or credit score.

 

Are five-year fixed rate ISAs suitable for business savings?

No. ISAs are only for personal savings; for any business savings, you should look for a dedicated business savings account instead.

 

Will I be alerted if the interest rate changes before my ISA matures?

Because you’re getting a fixed rate, it cannot change before the ISA matures. However, if you’re approaching the end of the term, your provider should write to you to let you know what your new options are, including details of any alternative ISA products.

 

Is it possible to switch providers before my ISA matures?

Yes, though you’ll need to make sure you adhere to ISA transfer rules, and will need to bear in mind any early access penalties you’ll have to pay. Also note that not all providers will accept transfers in, so make sure to check all details before you start the process.

 

How to find an alternative or additional way to save or invest

You can complement your fixed rate ISA with different types of savings accounts and investments:

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Leanne Macardle

Freelance Contributor

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Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.