The 2011/2012 tax year started on April 6, and savers can now invest up to £5,340 in a cash ISA, up from £5,100 last year. But is it worth locking into a fixed rate account for four years to benefit from higher rates of interest, or are you likely to be better off opting for a shorter term fixed rate? We examine the different options and look at how the Halifax account stacks up against the competition….

What’s the deal?

Halifax’s Four Year Fixed Rate ISA Saver account pays a market-leading 4.40% annual interest tax-free on a minimum investment of £500. You can invest up to £5,340 this tax year, and you can also transfer in any previous years’ cash ISAs that you have with another provider.

The account can be managed online, in branches and by telephone. If you use Halifax’s online banking service, you can view your balance and recent transactions whenever you want to.

Halifax will write to you before your account matures to ask you where you want to move your funds next.

Halifax also offers one, two and three year Fixed Rate ISA Saver accounts, which pay 2.80%, 3.65% and 3.70% annual interest tax-free respectively. To be eligible to open any of these accounts, you must be a UK resident and aged 16 or over.

Any catches?

As with most fixed rate savings accounts, you cannot make withdrawals during the term of the account, so you must be certain you can afford to leave your money untouched for four years.

You can, however, close your account at any time if you need urgent access to your cash for any reason, but you will lose 180 days’ interest.

It is worth bearing in mind too that while this interest rate looks very attractive now, it might not appear quite as competitive once interest rates start to rise.


This is a great account for anyone who is happy to tie up their savings for four years, and who might be looking to move money across from previous ISAs which are no longer paying competitive rates of interest.

However, four years is a long time, so you should only consider this account if you can be absolutely sure that you won’t need your cash before 2015.

Other competitive ISAs over four years include Cheshire Building Society’s Fixed Rate Cash ISA which also pays a market-leading 4.40% annual interest tax-free on balances of £100 or more, and West Bromwich Building Society’s Fixed Rate ISA which pays 4.31% on a minimum investment of £1,000.

Top tip

If you are considering locking into an ISA for a shorter period of time, bear in mind that rates on easy access ISAs and one-year fixed rate ISAs are currently broadly comparable, so it is only really by locking into a longer term fixed rate ISA that you will benefit from higher rates of interest.

However, if you do opt for an easy access ISA rather than a fixed rate account so you can get your hands on your money easily, remember that if you have invested your full allowance and take money out, you cannot subsequently top up the account that same tax year.

To read more about the best cash ISAs account for the new tax year, both fixed rate and easy access, read our article ‘New tax year, new ISA allowance’.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.