With interest rates at an all-time low, it’s hard to beat inflation with your cash savings. Most easy access savings accounts are offering rates well below 1%. But lenders with the best cash ISAs rates are still paying over 1% this year. Here I take a look at the five best cash ISA rates in 2022.
The five best cash ISA rates
The best cash ISA rates are available for savers who are willing to lock up their cash for a full five years. This may not be possible for everyone. But if you’re a long-term saver, then these five-year fixed cash ISAs can help you squeeze out a little bit more interest from your cash savings.
If you do need to withdraw money before the end of your five-year fixed period, lenders usually close your account and pay you back your deposit with an interest penalty.
1. UBL UK 1.76%
This ISA squeaks ahead of the competition in our battle for the best cash ISA rates. It requires lenders to lock up their cash for a whole five-year term. The minimum balance to open an account is £2,000. The lender also offers slightly lower interest rates for shorter periods: 1.51% for four years and 1.41% for three years.
2. Coventry BS 1.75%
This is the second-best cash ISA rate we could find. Again, it requires lenders to lock up their cash for a whole five-year term. The lender also offers slightly lower interest rates for shorter periods: 1.51% for four years and 1.41% for three years.
3. United Trust Bank 1.75%
This cash ISA also offers one of the best cash ISA rates. However, this five-year fixed ISA requires lenders to deposit a minimum of £15,000. The lender also offers an even higher cash ISA rate of 1.77% if you can afford to lock up your savings for seven years.
4. Leeds Building Society 1.45%
This five-year fixed cash ISA has a minimum deposit of just £100. So, it may be a great option if you’re right at the beginning of your saving journey.
5. Skipton Building Society 1.45%
This five-year fixed cash ISA also offers a rate of 1.45%, but the minimum deposit is slightly higher at £500.
Is a five-year fixed cash ISA right for you?
Although five-year fixed cash ISAs offer some of the best cash ISA rates, they may not be suitable for everyone.
Most experts recommend saving an emergency fund of three to six months’ worth of expenses before considering such long-term saving. This will help you to cover an unexpected bill or a period of unemployment.
It’s usually a good idea to save this emergency fund somewhere you can access the money quickly, without having to give notice. Otherwise there is a danger you will need to pay for an unexpected expense by accessing your ISA or using an expensive credit card.
If you know you’ll need to access your cash during the next five years, then take a look at some of our other top-rated cash ISAs.
Are there other options for long-term savings?
If you already have an emergency fund and you’re not saving for a specific expense, then you could consider opening a stocks and shares ISA. Stocks and share ISAs allow you to invest in individual shares as well as investment funds.
Returns from stocks and shares are usually greater than those from cash savings in the long term. However, because the stock market can fluctuate significantly, stocks and share ISAs are not usually suitable for short-term investments.
If you think the stocks and shares route could work for you, then take a look at some of our top-rated stocks and shares ISAs.
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About the author
Alice is a Suffolk-based personal finance writer specialising in pensions, tax, investment and small businesses. She is a qualified Chartered Accountant and has previously worked for KPMG London and Tesco Plc.
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