Advice on Cash ISA term

alongtimetogoyet

I'm just in the process of reviewing the rates on my Cash ISAs. I currently have an Easy Access one with Paragon paying 1.74% which is clearly below current market levels.

I definitely will not need to access this for a number of years and so I'm looking to go fixed rate. 

The best rates are for the 5 year terms (currently 3.85% for anything from 18 months to 5 years).

Is it better to go 2-3 years in case anything changes or just go for 5. Long term rates might have peaked now as I think Paragon have already cut theirs in the last few weeks.

TIA

Bridlington1

There's no right or wrong answer here as it's largely down to speculation. If you think interest rates will rise soon, you'd be better off going for shorter fixes, notice accounts or even easy access for now. If you think interest rates will stay largely static or drop, opt for the longer fix.  

If you don't need access to your funds for a number if years (5 years minimum), it may be worth going for a stocks and shares ISA instead as these typically yield higher returns over the long term compared to cash savings. 

Do you need access to the funds before retirement? If not then topping up pensions is a wise move as you'll benefit from the tax advantages and employers contributions if applicable. 

alongtimetogoyet

If you don't need access to your funds for a number if years (5 years minimum), it may be worth going for a stocks and shares ISA instead

 I already have one and will continue paying into this monthly. 

Do you need access to the funds before retirement? If not then topping up pensions is a wise move as you'll benefit from the tax advantages and employers contributions if applicable. 

No I don't. I have 2 public sector pensions, 1 current and 1 deferred. 

Albermarle

alongtimetogoyet said:

I'm just in the process of reviewing the rates on my Cash ISAs. I currently have an Easy Access one with Paragon paying 1.74% which is clearly below current market levels.

I definitely will not need to access this for a number of years and so I'm looking to go fixed rate. 

The best rates are for the 5 year terms (currently 3.85% for anything from 18 months to 5 years).

Is it better to go 2-3 years in case anything changes or just go for 5. Long term rates might have peaked now as I think Paragon have already cut theirs in the last few weeks.

TIA

I think 5 years is a long time to tie your money up for, when in such a long period, economic conditions could change dramatically. Especially when 5 year rates seem to be no better than shorter ones. As said it is always a bit of a gamble, but personally I would go for two or three years. Alternatively you could hedge your bets and split it, and have one for two years and one for 5 years.

qbs

alongtimetogoyet said:

I'm just in the process of reviewing the rates on my Cash ISAs. I currently have an Easy Access one with Paragon paying 1.74% which is clearly below current market levels.

I definitely will not need to access this for a number of years and so I'm looking to go fixed rate. 

The best rates are for the 5 year terms (currently 3.85% for anything from 18 months to 5 years).

Is it better to go 2-3 years in case anything changes or just go for 5. Long term rates might have peaked now as I think Paragon have already cut theirs in the last few weeks.

TIA

Have a look at the rates on https://moneyfacts.co.uk/isa/fixed-rate-isas/?quick-links-first=false