Fixed-Rate Cash ISAs Pay Up to 4.32% — Here's How to Lock In Before the BoE Cuts Again

A fixed-rate cash ISA locks your money away at a guaranteed interest rate for a set term — typically one, two, three, or five years. Unlike easy-access cash ISAs, where the provider can slash the rate at any time, a fix gives you certainty.

There's a crucial legal protection most savers don't know about: cash ISA providers must let you withdraw your money before the term ends. This is unique to ISAs — regular fixed-rate savings bonds can genuinely lock you out. The catch is a penalty, usually 90 to 360 days' lost interest depending on the term length. That penalty is significant but bounded, unlike the open-ended risk of watching easy-access rates slide from 4.68% today toward 3% over the next 18 months.

Your deposits are covered by the Financial Services Compensation Scheme up to £120,000 per person, per banking licence. Since April 2024, you can hold multiple cash ISAs in the same tax year — so splitting £20,000 between a fixed-rate ISA and an easy-access ISA is perfectly legitimate. For more on how cash ISAs work overall, see our comprehensive ISA guide.

Here's what the market looks like as of mid-March 2026. All rates are AER.

One-year fixes:

• Tandem Bank: 4.22% (min £1, 90 days' interest penalty, app-only, accepts transfers)
• Coventry Building Society: 4.21% (min £1, matures 31 May 2027, available online/app/branch)
• Investec: 4.20% (min £1,000, no transfers in)

Two-year fixes:

• Tandem Bank: 4.21% (min £1, 180 days' penalty, accepts transfers)
• Furness Building Society: 4.20% (min £1,000, online/branch, accepts transfers)
• Castle Trust Bank: 4.17% (min £1,000, 180 days' penalty)

Five-year fixes:

• Tandem Bank: 4.32% (min £1, 360 days' penalty, accepts transfers)
• Castle Trust Bank: 4.31% (min £1,000, 360 days' penalty)
• Furness Building Society: 4.30% (min £1,000, accepts transfers)

The stand-out pattern: there's almost no rate premium for locking in longer. The one-year fix pays 4.22% and the two-year pays 4.21%. Only the five-year fix at 4.32% offers a meaningful uplift. That tells you the market expects rates to stay broadly flat — or that providers are pricing in further BoE cuts and competing aggressively for short-term deposits.

If you want a big-name provider, Coventry Building Society (4.21% one-year) and Nationwide (4.25% five-year) are solid choices. The premium for app-only challenger banks like Tandem is tiny.

Easy-access cash ISAs currently top out at 4.68% from Trading212 — nearly half a percentage point above the best one-year fix. So why would anyone fix?

Because that 4.68% is variable. It includes a one-year bonus of 1.08% that will vanish after 12 months. Strip out the bonus and you're at 3.60%. When the BoE cuts to 3.50% — which swap markets price as likely by late 2026 — your easy-access rate will follow it down. A one-year fix at 4.22% guarantees your return regardless.

Here's the maths on £10,000 over one year:

• Easy-access at 4.68% (if the rate holds for 12 months): £468 interest
• Easy-access at 4.68% for 6 months then 3.80% for 6 months: ~£424 interest
• One-year fix at 4.22%: £422 interest, guaranteed

The fix loses if easy-access rates hold firm all year. But it wins if the BoE delivers two or more 25bp cuts — a scenario most economists forecast. For anyone with cash they won't need for 12+ months, the fix removes guesswork entirely.

The right move for most people is both: keep three to six months' expenses in easy-access (see our savings guide), then fix the rest. Since April 2024, you can open multiple cash ISAs in the same tax year, so there's no reason to choose one or the other.

Higher-rate and additional-rate taxpayers — this is where the ISA wrapper earns its keep. A higher-rate taxpayer's Personal Savings Allowance is just £500. Earn 4.22% on £20,000 in a non-ISA fixed bond and you'll generate £844 of interest — £344 of which is taxable at 40%. That's £137.60 straight to HMRC. Inside an ISA, you keep every penny.

Additional-rate taxpayers at 45% have no Personal Savings Allowance at all. For them, every pound of savings interest outside an ISA is taxed. A £20,000 fixed ISA at 4.22% saves an additional-rate taxpayer £380 in annual tax.

Basic-rate taxpayers get a £1,000 PSA, so the ISA wrapper only matters once savings interest exceeds that threshold. With rates at 4.22%, that's roughly £23,700 in savings before you'd pay any tax. If your total savings across all accounts exceed that, use the ISA. If not, a regular fixed-rate bond paying a slightly higher rate is better.

People approaching retirement also benefit from the certainty. A two or three-year fix gives a predictable income stream without market risk — useful for cash you'll need in defined timeframes.

Every fixed-rate cash ISA charges a penalty if you withdraw before the term ends. Typically:

• One-year fix: 90 days' lost interest
• Two-year fix: 180 days' lost interest
• Five-year fix: 360 days' lost interest

This sounds punishing, but compare it to regular fixed-rate bonds. As MoneyHelper explains, cash ISAs have a legal right of withdrawal that normal savings bonds don't —, which often don't allow early access at all. The penalty is deducted from your accrued interest, never from your capital. If you've held a one-year fix at 4.22% for six months and need to break it, you lose 90 days' interest (£103 on £10,000) but keep the remaining three months' worth (£106). You still come out ahead of a current account.

The real risk isn't the penalty — it's opportunity cost. If the BoE unexpectedly raises rates and one-year fixes jump to 5%, you're stuck at 4.22%. But with the BoE signalling more cuts, not hikes, this scenario is remote.

One tip: Coventry Building Society lets you choose monthly or maturity interest on its one-year fix. Choosing monthly means you've already banked some interest before any potential penalty applies — a minor optimisation, but a free one.

The 2025/26 tax year ends on 5 April 2026. Any unused ISA allowance vanishes — you can't carry it forward. If you haven't used your £20,000 allowance, here's the fastest path:

1. Choose your provider. For one-year fixes, Tandem Bank (4.22%) or Coventry BS (4.21%) lead the pack. Tandem is app-only; Coventry offers branch access.
2. Fund the account. Most providers require you to deposit your full amount within 14 to 28 days of opening. Don't open if you can't fund promptly — you'll waste the slot.
3. Transfer existing ISAs separately. If you have old ISAs earning poor rates, transfer them via the [official ISA transfer process](https://www.gov.uk/individual-savings-accounts/transferring-your-isa). Never withdraw and redeposit — you'll lose the tax-free status permanently. For a complete walkthrough, read our cash ISA transfer guide.
4. Set a maturity reminder. When your fix ends, providers move you to a terrible rate. Diarise the maturity date and shop around before it hits.

You've got three weeks. At 4.22% on £20,000, that's £844 in guaranteed, tax-free interest over the next year. There are worse ways to spend 15 minutes on a Saturday morning.

This article is for informational purposes only and does not constitute financial advice. You should seek independent financial advice before making any investment decisions.