Can you add money to a Fixed Rate ISA?
Fixed Rate ISAs can be a smart way to grow your savings, especially if you’re looking for guaranteed returns and you won’t need access to your money for a while. But what happens if you want to keep adding to your savings pot after you’ve opened the account?
Withdrawing funds before maturity will incur a charge. Partial withdrawals from a Fixed Rate ISA are restricted. Tax treatment depends on individual circumstances and may be subject to change in the future
What is a Fixed Rate ISA?
A Fixed Rate ISA is a type of ISA that pays a guaranteed interest rate for a set period of time — usually between 1- 5 years. You won’t pay tax on the interest you earn, unlike with a normal savings account, and the rate you lock in at the start won’t change for the length of the term you sign up for. In return for the higher rate, you’ll need to agree not to touch your money for the duration of the fix. That means no withdrawals, and in many cases, no additional deposits either.
Can you add money to a Fixed Rate ISA after opening it?
In most cases, no. Once you’ve opened a Fixed Rate ISA and made your initial deposit, that’s it. Your account will essentially be locked, and you won’t be able to add any more money. Some providers will give you a small window of time (usually 7 to 30 days after opening the account) to make additional deposits. After that, typically your ISA will be under lock and key for the remainder of your fixed period.
If you want the freedom to add more money throughout the term, our upcoming Fixed Rate ISA will let you lock in a guaranteed (and competitive) interest rate on your initial lump sum, while also giving you the freedom to top up your savings later. Any extra deposits you make during the term will earn the interest rate available at the time!
What if I want to withdraw money from a Fixed Rate ISA?
If you need to withdraw money before the end of your fix, your provider may close your account and charge you a penalty. When you sign up for a Fixed Rate ISA, you’re agreeing to lock away your money for a set time period in return for a guaranteed interest rate for a set period.
The amount you’ll be charged will depend on your provider and your ISA’s terms and conditions, but it’s usually connected to the amount of interest you’ve earned. Some providers will charge as little as 30 days interest, while others will charge up to a year’s worth of interest.
What are the alternatives if you want more flexibility?
1. Open an easy access Cash ISA
If you want to make deposits and withdrawals without any restrictions, you may be better off putting some of your savings in an easy access Cash ISA. You can top this up whenever you like, and still enjoy tax-free interest. The trade-off is that the interest rate will usually be lower than it would be if you committed to a fixed rate deal, and could change as it is variable instead of fixed.
2. Look for flexible fixed rate accounts
A handful of providers are experimenting with Fixed Rate ISAs that allow top-ups even after the initial deposit. Your extra deposits will lock in at the rate that’s available at the time.
3. Use your ISA allowance across multiple accounts
Remember, you can open and pay into multiple types of ISA in the same tax year, as long as you don’t go over the £20,000 total limit. That means you could use a Fixed Rate ISA for your lump sum and an easy access Cash ISA for regular top-ups.
If you’re saving for your first home or retirement, you could place up to £4,000 of your annual allowance in a Lifetime ISA. Not only will you earn tax-free interest on your savings, the government will also boost your contributions by 25% for free. Max out your LISA 5 years in a row, and that’s a sweet £5,000 bonus towards your house deposit or retirement!
Learn more in our What is a Lifetime ISA? guide
Ineligible Lifetime ISA withdrawals may return less than paid in.