What is a Fixed Rate ISA and why choose one in 2025
A fixed rate ISA locks your money away for a set period, offering a guaranteed interest rate that does not change, providing security in uncertain times. This type of cash ISA is ideal for savers seeking stable returns, especially with the UK base rate expected to drop to around 3.75% by mid-2025 according to Bank of England projections, potentially squeezing variable rates. Choosing the best fixed rate ISA in 2025 means prioritising providers like those highlighted by Martin Lewis on MoneySavingExpert, where top fixed options reach 4.27% AER (annual equivalent rate, the standard way to compare interest).
Fixed rate ISAs outperform easy access accounts when you can commit funds without needing withdrawals, as current top fixed rates sit at 4.27% compared to 4.51% for easy access, but with the lock-in benefit of predictability. Drawbacks include penalties for early access, often losing 90-150 days’ interest, so they suit emergency-fund-free savers. In 2025, with inflation easing but rates falling, these ISAs protect against drops, allowing up to £20,000 tax-free savings per tax year as per HMRC rules.
Top 1-year fixed rate ISAs
The best 1-year fixed rate ISA currently offers up to 4.27% AER, ideal for short-term security without long commitments. Providers like Close Savings and Shawbrook Bank lead with this rate, requiring minimum deposits from £5,000, while Virgin Money’s 1-year fixed rate cash ISA at 4.16% AER suits smaller pots from £1. For over 60s, options like the best 1-year fixed rate ISA for seniors from Yorkshire Building Society may boost rates slightly, around 4.10% AER, emphasising accessibility.
Martin Lewis recommends scrutinising AER and fees via his best cash ISA guide on MoneySavingExpert’s platform, where fixed rates hold steady amid 2025 forecasts. Compare these against variable ISAs; fixed ones guarantee returns despite base rate cuts.
| Provider | AER (%) | Minimum Deposit | Term | Eligibility Notes |
|---|---|---|---|---|
| Close Savings | 4.27 | £5,000 | 1 year | UK residents 18+ |
| Shawbrook Bank | 4.27 | £5,000 | 1 year | Online only |
| Virgin Money | 4.16 | £1 | 1 year | App or branch |
| Santander | 3.90 | £500 | 1 year | Branch access |
This table, drawn from Moneyfacts’ 1-year fixed rate ISAs comparison, shows top picks for the best fixed rate ISA rates in 2025.
Best 2-year and longer-term fixed rate ISAs
For medium-term savers, the best 2-year fixed rate ISA yields up to 4.10% AER, balancing commitment with reward, as seen from providers like United Trust Bank. Longer terms like 3-year fixed rate ISAs offer 3.95% AER, while the best 5-year fixed rate ISA reaches 4.00% AER for ultimate stability, per Moneyfacts data. These suit those planning ahead, locking in rates before further Bank of England cuts erode returns.
The best fixed rate cash ISA 2 years from Skipton Building Society at around 3.95% AER includes FSCS protection up to £85,000. For 3-5 years, consider penalties: early withdrawal could forfeit all interest, so assess liquidity needs first.
- 2-year: Higher initial rates than longer terms but more flexibility post-maturity.
- 3-year: Mid-range for steady growth, e.g., 3.90% AER from Shawbrook.
- 5-year: Best for long horizons, protecting against rate falls to 3.75% base.
View full comparisons on Moneyfacts’ fixed rate ISAs page.
Provider spotlights and niche picks
Santander’s fixed rate ISA stands out for accessibility, with their 1-year at 3.90% AER and 2-year option detailed on their site, though not the highest rate. Yorkshire Building Society (YBS) offers competitive best fixed rate cash ISA rates for over 60s, often 0.10-0.20% above standard, via their cash ISAs range. Martin Lewis’ best 2-year fixed rate ISA picks emphasise tax-free perks, aligning with MSE’s top selections.
Niche options like fixed rate ISA bonds mimic security but check for liquidity. For seniors, the best fixed rate cash ISA rates for over 60s prioritise ease, with YBS and Skipton leading.
Explore YBS options at Yorkshire Building Society’s cash ISAs or Skipton’s at Skipton’s fixed rate ISAs.
How to choose and open a fixed rate ISA
Select based on term length, AER, and minimum deposit: match your savings horizon to avoid penalties, prioritising FSCS-protected providers. Eligibility requires UK residency and age 18+; over 60s may access boosted rates. The ISA allowance is £20,000 for 2025/26, tax-free per HMRC via MoneySavingExpert’s cash ISA rules.
To open, compare via aggregators, then apply online or in-branch—transfer existing ISAs penalty-free. Steps include ID verification and fund deposit; monitor maturities for reinvestment.
Frequently asked questions
What is the best 1-year fixed rate ISA in 2025?
The best 1-year fixed rate ISA in 2025 offers 4.27% AER from providers like Close Savings and Shawbrook Bank, as per Moneyfacts comparisons, providing tax-free security for short-term savers. This rate beats many easy access options post base rate cuts, but requires locking funds without early withdrawal penalties of up to 150 days’ interest. For those seeking Martin Lewis’ best 1-year fixed-rate ISA, check MSE for vetted picks emphasising minimum deposits from £5,000 and FSCS cover.
Who has the highest fixed rate ISA?
Currently, Close Savings and Shawbrook hold the highest fixed rate ISA at 4.27% AER for 1-year terms, according to Moneyfacts’ daily updates, outpacing larger banks like Santander at 3.90%. These top rates apply to cash ISAs with £20,000 allowance, ideal for maximising returns in a falling rate environment. Savvy savers should compare via aggregators, as providers adjust frequently to compete in the UK market.
Are fixed rate ISAs worth it in 2025?
Fixed rate ISAs are worth it in 2025 for risk-averse savers, locking in up to 4.27% AER against projected base rate drops to 3.75%, ensuring predictable tax-free growth. They suit those with stable finances, outperforming variable rates long-term, though liquidity limits make them unsuitable for emergency funds. Experts like Martin Lewis highlight their value in MSE guides for protecting against inflation outpacing savings returns.
How do fixed rate ISAs compare to easy access?
Fixed rate ISAs offer higher guaranteed AER, like 4.27% versus easy access at 4.51%, but with no withdrawals allowed, per MoneySavingExpert comparisons—best for committed savers. Easy access provides flexibility at slightly lower rates, ideal for frequent needs, while fixed ones shield from rate cuts in 2025. Choose fixed for better long-term yields if you can forgo access, balancing with your £20,000 allowance.
What are the best fixed rate ISAs for over 60s?
The best fixed rate ISAs for over 60s include boosted rates from YBS at around 4.10% AER for 1-year terms, focusing on accessibility and FSCS protection up to £85,000. These often require lower minimums and branch support, addressing demographic needs amid 2025’s rate landscape. Compare via specialist searches, as seniors benefit from tax-free perks without complex eligibility beyond age and residency.
What is the best fixed rate ISA rates for 2 years?
Top best fixed rate ISA rates for 2 years reach 4.10% AER from United Trust Bank, offering medium-term stability per Moneyfacts, with penalties for early exit to discourage withdrawals. This suits planners eyeing 2025 rate falls, providing higher yields than shorter terms while staying under the £20,000 limit. Martin Lewis advises verifying provider reliability, like Nationwide’s options, for secure tax-free savings.
How much can I save in the best 5-year fixed rate ISA?
You can save up to £20,000 annually in the best 5-year fixed rate ISA, yielding around 4.00% AER from providers like Shawbrook, locking in long-term against economic shifts. This maximises compound interest tax-free, but assess if the 5-year commitment fits your goals, given withdrawal losses. For advanced strategies, pair with shorter terms to ladder maturities, as suggested in MSE’s comprehensive guides.
