It’s important to choose the right type of savings account for you, and this will often depend on your savings goals, how you want to save and your financial position. When considering different types of savings accounts, you may find yourself asking the question, “should I open a fixed rate bond or an ISA?” 

On this page, you’ll learn more about what fixed rate bonds and ISAs are, understand the differences between them and find out what to consider when opening fixed rate bonds or ISAs.

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What are fixed rate bonds?

A fixed rate bond is a type of savings account that locks your money away at a fixed rate of interest for a fixed time, usually between six months and five years. Fixed rate savings accounts typically offer competitive interest rates that won’t change from the day you open the account until the end of your agreed term.

This provides the certainty of a guaranteed return, which is especially reassuring in times of interest rate volatility. The amount of interest you’ll earn will also depend on the amount you’re willing to deposit and the term you choose. In general, the longer you lock away your money in fixed rate bonds, the higher the interest you’ll receive at the end of the term.


What are ISAs?

ISAs, or individual savings accounts, are tax-free savings accounts. You can save up to £20,000 per tax year without paying tax and choose from different types of ISAs, such as cash ISAs, stocks and shares ISAs, innovative finance ISAs and lifetime ISAs.

The most common ISAs are cash ISAs, and there are three different types of cash ISA, including the following:

  • Instant access ISAs, which provide the flexibility to withdraw your savings without penalty
  • Regular savings ISAs, which offer competitive interest rates over a certain period of time as long as you deposit a certain amount each month
  • Fixed rate cash ISAs, which are similar to fixed rate bonds in that you commit to locking your money away for a certain period of time to earn a fixed interest rate

What's the difference between fixed rate
bonds and ISAs?

Fixed rate bonds

  • Fixed rate bonds typically offer more competitive interest rates
  • You can’t usually withdraw your money until the end of your fixed term
  • Deposit a lump sum at the beginning of your term and watch your savings grow
  • Deposit almost as much as you want, although the FSCS will only protect deposits to UK regulated banks up to £85,000 per person, per banking group
  • The fixed interest rate means you’ll know exactly how much you’ll earn by the end of your term


  • ISAs give savers the flexibility of making withdrawals (although you may incur a fee, depending on the financial institution)
  • The maximum you can save across all your ISAs combined is £20,000 per tax year (typically April 6th to April 5th)
  • ISAs typically offer variable rates that aren’t as competitive as fixed rate bonds, but interest rates may increase towards the end of the tax year to encourage savers to deposit up to the maximum allowance before the tax year ends

Should I open a fixed rate bond or an ISA?

Choosing between a fixed rate bond and an ISA will depend on your savings goals, and it may even be beneficial to open both types of savings account. If you’ve already reached the ISA deposit limit of £20,000 or you want a guaranteed return on a lump sum that you can lock away until the end of a fixed term, a fixed rate bond might be best for you. However, if you think you may need to access your money, an ISA (or a notice account) might be better.

Opening fixed rate bonds with Raisin UK

While we don’t currently offer ISAs, if you want to quickly and easily open fixed rate bonds from a range of banks, simply register for a Raisin UK Account and log in to apply online for free today.

Find out more about how to apply by reading our guide to opening a fixed rate bond.

If you have any further questions, our UK-based Customer Services Team is happy to help.

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