Best 5 Year and Longer Fixed Rate ISAs

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.

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.

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.

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.

Information you may find useful

• HMRC information on ISAs
• Best notice savings accounts
• Best Lifetime ISAs
• Monthly savings calculator