What is a fixed-rate ISA and why choose one?
A fixed-rate ISA offers a guaranteed interest rate for a set period, providing stability in uncertain economic times. As of October 2025, the best ISA rates fixed stand at up to 4.28% AER, making them ideal for savers seeking predictable returns without the fluctuations of variable rates. These tax-free accounts allow you to shelter up to £20,000 from the 2025/26 tax year, as per HMRC rules, beating standard savings where interest might be taxed.
Fixed-rate ISAs differ from easy-access options by locking your money for terms like one or two years, shielding you from rate drops following Bank of England decisions. Benefits include higher yields than averages—currently 3.89% for one-year deals—and peace of mind amid 2025’s projected base rate cuts. However, risks involve penalties for early withdrawal, often up to 180 days’ interest, so they’re best for funds you won’t need soon.
Key benefits:
- Tax-free growth on interest.
- Fixed AER (annual equivalent rate, which shows effective yearly return including compounding).
- Protection from falling rates in 2025.
Best 1-year fixed ISA rates
The top 1-year fixed ISA rate is 4.28% AER from Vida Savings, outpacing the UK average of 3.89% as of early October 2025. This makes it a strong choice for short-term savers maximising the best cash ISA fixed rates without long commitments. Providers like NatWest offer 4.20% AER with a minimum £1 deposit, open to UK residents aged 18+.
Eligibility typically requires UK tax residency and no prior fixed-rate lock-in exceeding the allowance. Minimum deposits range from £1 to £5,000, and interest can be paid annually or at maturity. To apply, check FCA-regulated providers via comparison sites.
| Provider | AER | Min Deposit | Early Withdrawal Penalty |
|---|---|---|---|
| Vida Savings | 4.28% | £500 | 150 days’ interest |
| NatWest | 4.20% | £1 | 90 days’ interest |
| HSBC | 4.00% | £500 | 120 days’ interest |
For broader comparisons, explore best isa rates across all types. Data sourced from MoneySavingExpert and Moneyfactscompare.co.uk.
Top 2-year fixed ISA deals
Leading 2-year fixed ISA rates hover around 4.00% AER, slightly below one-year options but offering longer security against 2025 rate volatility. Santander’s 2-year fixed rate ISA provides competitive yields with a £500 minimum, ideal for the best fixed cash ISA rates for 2 years. Compared to one-year deals, these lock in medium-term stability, though averages sit at 3.84% for terms over 550 days.
Transfers from existing ISAs are allowed up to your £20,000 allowance, but check for penalties on the old account. Providers often require online or branch applications, with interest compounded annually.
Pros of 2-year terms:
- Potentially higher total returns over time.
- Less frequent rate shopping needed.
- Suits savers planning for future expenses.
See detailed 2025 options in our guide to best isa rates 2025. Rates from Santander and Moneyfacts.
Tip: Maximise your fixed ISA
Before committing, calculate projected earnings using AER. For £10,000 at 4.00% over two years, expect around £816 tax-free. Always verify current rates, as they change frequently post-BOE announcements.
Best fixed ISAs for over 60s
Seniors over 60 can access enhanced fixed ISA rates, with top deals up to 4.10% AER tailored for retirement planning. Providers like Coventry Building Society offer age-specific perks, such as higher introductory rates in the best fixed ISA rates for over 60s. These accounts maintain the £20,000 allowance but may include flexible withdrawals or bonuses, addressing common senior needs.
Eligibility focuses on age verification, with many open to joint accounts for couples. Compared to standard fixed rates, over-60s options often beat averages by 0.20-0.30%, per industry data. For more, check best isa rates for over 60s.
Insights from Martin Lewis at MoneySavingExpert highlight these as undervalued for pension supplements.
Longer-term fixed ISAs (3-5 years)
For 3-5 year commitments, best fixed ISA rates for 5 years reach 3.90% AER, appealing amid forecasts of sustained low rates in 2025. Three-year deals average 3.85%, suitable for long-term goals like home deposits. Locking in now protects against further drops, but consider inflation eroding real returns.
Market trends show slight rises in longer-term averages to 3.84%, per Moneyfacts October 2025 data. Providers like Leeds Building Society feature competitive 5-year options with £100 minimums.
How to choose and open the best fixed ISA
Prioritise AER, term length, and penalties when selecting the best ISA fixed rates—aim for at least 4.00% for one-two years. Compare via independent sites, ensuring FCA regulation for safety. Switching involves transferring within 30 days to avoid losing allowance.
Steps to open:
- Verify eligibility (UK resident, 18+).
- Gather ID and proof of address.
- Apply online or in-branch; fund via transfer or deposit.
Monitor changes via FCA guidelines. For expert advice, see martin lewis best isa rates.
Frequently asked questions
What is the best 1-year fixed ISA rate?
The highest 1-year fixed ISA rate is currently 4.28% AER from Vida Savings, as of October 2025, surpassing the UK average of 3.89%. This rate applies to cash ISAs with a £500 minimum deposit and is tax-free up to the £20,000 allowance. Savers should compare providers like NatWest at 4.20% for accessibility, but always check for updates given Bank of England influences.
Are fixed-rate ISAs worth it in 2025?
Yes, fixed-rate ISAs remain worthwhile in 2025 for their stability amid projected rate cuts, offering up to 4.28% AER versus variable options below 4%. They suit low-risk savers committed to terms, maximising tax-free growth on the £20,000 allowance. However, if liquidity is key, easy-access might suit better despite lower yields; weigh penalties against potential rate falls.
What are the best fixed ISA rates for over 60s?
Top fixed ISA rates for over 60s include 4.10% AER from specialist providers like Coventry, often with senior perks like no minimums or bonus interest. These outperform general averages by focusing on retirement needs, maintaining tax-free status under FCA rules. Experts recommend them for steady income, but verify age eligibility and compare via sites like Moneyfacts for the latest deals.
How do I open a fixed-rate ISA?
To open a fixed-rate ISA, select an FCA-regulated provider offering competitive AER, such as 4.28% for one year, then apply online with ID and address proof. Transfer existing ISA funds if within allowance to avoid gaps; the process takes days. Ensure the term matches your needs to dodge early withdrawal fees up to 180 days’ interest.
What happens if I withdraw from a fixed ISA early?
Early withdrawal from a fixed ISA incurs penalties, typically 90-180 days’ lost interest, plus possible account closure fees, reducing your returns significantly. For example, on a 4.00% two-year deal, this could cost hundreds on larger sums. Providers like Santander detail these in terms, so review before committing; alternatives include partial transfers to flexible ISAs.
Can I transfer a fixed ISA to get better rates?
Yes, you can transfer a fixed ISA to a new provider for better rates without affecting your £20,000 allowance, but only complete terms or pay penalties on the old one. This is useful in 2025 for chasing top yields like 4.28%, via direct transfer requests. Consult guides from MoneySavingExpert to avoid tax implications and ensure seamless FCA-protected moves.
What is AER in fixed ISAs?
AER (annual equivalent rate) represents the effective yearly interest including compounding, helping compare the best fixed cash ISA rates apples-to-apples. For instance, a 4.00% AER on £10,000 yields more than simple interest over time. It’s standardised by FCA for transparency, essential when evaluating 2025 deals against inflation.
