You can withdraw your money from a fixed rate ISA, but this will usually be at the expense of a penalty.
- All cash ISAs allow you to transfer your money into another ISA at any time
- However, they don't have to allow you to withdraw your money directly (in order to make a withdrawal, you may have to transfer your money to an easy access ISA first)
Either way, if you do need to access money held in a fixed rate ISA before the end of its term, you may well have to forfeit a fair amount of interest. Generally, interest penalties will see you lose a set number of days' interest, although some providers ask for a tapered amount depending on when you need to access your cash and the length of term remaining.
Less commonly, some ISAs may charge a flat fee instead, such as £50. While this might at first glance appear off-putting, on larger balances a £50 fee could actually be cheaper than an interest penalty. Just remember that early access penalties can be a common feature of fixed rate ISAs, so you may want to look elsewhere, such as at a variable rate ISA, if you think you might need access during the term.
Also, remember that if you do withdraw your money from an ISA rather than following the transfer process, you may not be able to replace it later. You can only put as much as the annual ISA allowance away in a single tax year. That said, some ISAs do allow you to withdraw and replace funds provided that the total invested doesn't exceed the ISA limit, although not all providers will allow this flexibility.