Isas (Individual Savings Accounts) allow people to save thousands of pounds tax-free every year. The maximum cash Isa amount for this tax year is £15,240.
Fixed-rate Isas mean that savers cannot access their money during the fixed term, if they do, they will face the penalty of lost interest.
Interest rates on Isas and other savings accounts are influenced most by the UK Bank Rate, which was cut from 0.5pc to 0.25pc in August, but also by how keen banks and building societies are to raise money from savers.
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Locking your money into a one, two or three year fixed-rate Isa could be a good idea if the income meets your needs, and you’re certain you won’t need to touch the money during the fixed term.
The best fixed-rate cash Isa deals
Bank of Cyprus UK pays the top rate of 1.2pc.
Accounts can be opened with £500. Those who break the term will be charged a penalty fee of 180 days interest.
A higher rate is offered by Al Rayan Bank which pays 1.36pc. However, under Islamic principles, this is an “expected profit rate” rather than interest. This means it is not guaranteed. Al Rayan says it has always achieved it since it launched in 2004.
Bank of Cyprus UK and Kent Reliance both pay 1.25pc.
As above, the Bank of Cyprus account can be opened with £500.
Kent Reliance customers must deposit at least £1,000. Withdrawals are permitted subject to 180 days loss of interest.
Paragon Bank and Shawbrook Bank both pay 1.5pc.
Paragon customers need just £500 to open the account. Transfers in are permitted. Withdrawals are allowed subject to 270 days loss of interest.
Shawbrook requires a much higher minimum deposit of £5,000. Like Paragon, Shawbrook charges a penalty fee of 270 days interest for those who need to access funds before the term ends.
Shawbrook Bank offers 1.7pc. The account accepts new Isa subscriptions and can be opened online. Customers may make earlier withdrawals but will face a charge equivalent to 360 days interest.