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There are several features and benefits that fixed rate ISA’s have that isn’t available with a variable rate account. An ISA is very easy to open, but it’s not always easy to decide which type of account is the best cash ISA for you. But, by simply knowing the benefits, you can make an informed choice.
If you’re on a fixed income, or already retired and don’t like taking chances with your savings, a fixed rate ISA is a perfect choice. With a fixed rate, you know exactly what you’ll be earning for the first year after you open your account. But, after that year, your rates will drop to the providers standard rate.
While some providers will restrict your access to your savings, other may allow you to make a certain number of withdrawals each year. If you don’t anticipate having to use any of your savings, this won’t be a problem. But, if you think you may have to use some of your balance, you will want to be clear about your options on withdrawals.
Like any other cash ISA, a fixed rate ISA will earn tax free interest. That interest is usually calculated on a daily basis, but it can be paid either monthly, once every six months, or once each year. Some providers will even allow you to choose when you want to receive your interest instalments.