Which? research reveals customers with a fixed-rate cash Isa due to mature in the next few weeks may be in for a nasty surprise, as the best rates currently on offer have dropped by over a third one-year on.
The best one-year fixed-rate cash Isa offered this time last year was from Santander paying a reasonable 3.5%. Today the best one-year fixed-rate cash Isa pays just 2.1% – a drop of over a third.
Cash Isas: do longer deals offer better rates?
A fixed-rate cash Isa will lock away your money for a set period, usually between one and five years. In general the longer you’re willing to commit for the better the interest rate you’ll get. The bad news is, compared to last year, it’s a similar picture with even the longer fixed-rate cash Isa deals.
This time two years ago (March 2011) the average two-year fixed rate Isa stood at 3.31% but this has now fallen to 2.26%. Similarly, even five-year deals show little improvement a year on. The best five-year cash Isa deal currently on the market is from Halifax offering 3.1%, 1.4 percentage points less than the best five-year deal 12 months ago.
Fixed-rate cash Isas: how to find the best rates
Savings rates have plummeted over recent months, the positive correlation between longer fixed terms and interest rates is no longer the case. This means it’s even more important to make sure you’re on the best deal.
To make sure you are getting the best rates on the market use our Which? savings rates booster to find out how much more your savings could be earning. Our best rate tables show the best fixed-rate cash Isas whether you want to commit for just one-year, up to five, or something in between.