Inflation saw another large jump in December, official figures have revealed, with the measure of CPI standing at 1.6% (up from 1.2% in November). Unfortunately, this has had a damaging impact on the savings market: just 44 savings accounts now pay a rate that will match or beat it, none of those being easy access accounts.
Inflation has been on a sharp upwards trajectory in recent months, and it's expected to rise even faster over the next year. This, combined with record low savings rates, means it's becoming more difficult to find an account that will give a measurable return, so don't leave it to chance!
It's vital to make sure you're getting the best deal possible. ISAs continue to offer one of the best ways to secure those inflation-beating returns, despite the Personal Savings Allowance (PSA) being in force (which allows up to £1,000 in interest to be earned tax-free each year regardless of where your savings are held).
Even so, it's still worth investing in an ISA: your pot will remain tax-efficient no matter what happens to savings rates or PSA rules in future, and if you build up a healthy pot and earn more than £1,000 in interest, it becomes even more beneficial.
So, with that in mind, we've compiled a list of the top six fixed rate cash ISAs currently available. We've focused on longer-term accounts of at least three years as these are the ones that will offer the best returns on your money - not all of them are inflation-beating, but they're the best rates possible in this sector. You'll have to lock your cash away, but the returns could be worth it!
Taking the top spot is this five-year deal from Paragon Bank, paying a market-leading 1.60% from a minimum investment of £500. Transfers in are allowed, as are further additions for a limited period. Withdrawals are also possible, although it should be noted that this earlier access will result in the loss of 365 days' interest, the same penalty as applies to transfers away from this internet-operated account.
In second place is this internet-operated deal from Virgin Money, a five-year bond that pays 1.51% AER from a minimum investment of just £1. It permits both transfers in and further additions, together with earlier access, although this is subject to a 180-day interest penalty. However, it thankfully doesn't ask you to close the account should you need to access your cash early.
Securing a top three spot is this five-year deal from Metro Bank, paying 1.50% yearly from a minimum investment of £1. Transfers in are accepted for a limited period, but further additions and withdrawals are not. However, earlier access to funds is possible, subject to closure of the account and 180 days' loss of interest.
Next up is this deal from Shawbrook Bank, a five-year ISA that pays 1.45% yearly from a minimum investment of £5,000. Transfers in are accepted, as are further additions for a limited period. Withdrawals are also permitted subject to a loss of interest penalty, with the same penalty applying to those who wish to transfer away from this internet-operated account.
Hodge Bank 5 Year Fixed ISA
Hodge Bank nabs a place in the top five with this deal that pays 1.40% yearly to those with a minimum of £5,000 to invest. Transfers in are accepted, subject to a minimum amount, but further additions and withdrawals are not. If necessary, earlier access to funds is possible, but this will result in closure of the account and a penalty fee.
Hodge Bank has done it again with a second account securing a place in the charts, this time its four-year bond which just squeezes into the top six. It pays a rate of 1.30% yearly and only asks you to lock away your cash for four years - the shortest term in this overview - with all other features mirroring that of its five-year counterpart.
Information & rates correct as at: 17.01.2017
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.