Best Up To 1 Year Cash ISA Rates | moneyfactscompare.co.uk

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Up to one year fixed rate cash ISAs explained

It may be possible to find an ISA with a fixed term of up to one year, such as a six-month fixed term. This means the interest rate is guaranteed for the specified period.

However, not many providers offer these short-term ISAs, and you may find there are no options available on our charts. If that’s the case, you could consider a one-year ISA instead.

As with any other fixed-rate ISA, you typically won’t be able to withdraw money from an ISA with a fixed-term of up to one year, unless you’re willing to incur a loss of interest. Also, you may only be able to add to your account at the point of opening, or for a limited period afterwards.

You can deposit up to £20,000 in ISAs each tax-year, thanks to the annual ISA allowance, and you won’t need to pay tax on the interest you earn.

Should I consider fixing for a longer term?

It’s up to you whether you choose to fix for a longer term. However, because there are very few, if any, ISA providers that offer fixed terms of less than one year, you may have no choice but to choose a longer term if you want to open a fixed-rate ISA.

Fixing for a longer term means you won’t be able to access your money for longer. If you’re more comfortable having the option to withdraw from your savings, it may be worth putting your money in an easy access ISA or notice ISA instead of a fixed-rate ISA.

Alternatives to consider

Instead of a cash ISA with a fixed term of less than one year, there are plenty of other options you could consider.

For example, if you think you’ll need to access your money in under one year, you could consider an easy access ISA or notice ISA. While the interest rate isn’t fixed on these accounts, which means it could drop and pay less than you expected, you can withdraw your money without penalty.

It’s a good idea to have a sum of money put by in an easy access account that you can draw on if needed, rather than tying up all your savings in a fixed-rate account.

If you do want to secure a fixed rate, one-year ISAs are much more common which means you will have many more accounts to choose from.

Or, if you’re comfortable not having access to your savings for longer, you could also consider a two-, three- or even five-year fixed ISA.

Alternatively, if you want to lock in a guaranteed rate for under one year, you could look at a fixed-rate bond instead of an ISA. There are several fixed-rate bonds with terms of less than one-year to choose from, including accounts with terms of three, six and nine months.

However, unlike money in an ISA, the interest you earn on a fixed-rate bond or other standard savings account isn’t exempt from tax.