Santander launches inflation-beating fixed-rate ISAs amid cash ISA boom

The banking giant is offering some of the best rates on the market as customers join the race to maximise cash ISAs ahead of the 2027 ISA rules changesSantander has launched a new range of fixed-rate cash ISAs paying inflation-beating ratesWith potential base rate cuts next year and changes to the ISA rules, fixed-rate savings accounts could offer an opportunity to lock in rates now for those with short term savings goalsThe annual cash ISA allowance for individuals under 65 will drop from £20,000 to £12,000 starting in the tax year 2027–2028

Santanders fixed cash ISA range includes one, two, three and five-year accounts offering interest rates of up to 4.7 percent annual equivalent rate (AER).

Watch full video here: The one and two-year ISAs pay 4.5 percent AER and the three and five-year ISAs pay 4.65 percent and 4.7 percent AER, respectively.

Analysis by Paragon Bank shows fixed and instant-access cash ISA balances grew by 38 billion to 478 billion across 25.6 million accounts between January and May.

Who is able to open new fixed ISAs for Santanders?

You can open an account if youre 18 or over with a minimum deposit of 500.

Interest is paid into the accounts annually and at the end of the term. By September 30, 2026, deposits for the 2026-2027 year must be made.

You can withdraw money from the ISAs, but you must take out the entire balance and youll be charged a fee equal to 120 days interest.

Can I transfer an old ISA into Santander's ISAs?

You might be able to move your money into one of Santander's new fixed deals if you have an ISA elsewhere with a significantly lower rate and are content to put it away for a few years.

Just ask the provider for the correct form so that you do not lose the tax free status of the savings.

When transferring in, Santander promised to pay a hotel voucher worth up to 400.

Santander will email you a link and registration code within 28 days of your ISA transfer completing which you need to activate within 60 days to receive the voucher(s).

It is worth noting that some providers are also paying up to 1,500 cash bonuses when transferring into a stocks and shares ISA.

How do Santanders cash ISAs compare to the rest of the market?

None of Santander's fixed-rate cash ISAs are the best in the market based on a 500 deposit, but only marginally.

If you want a bank with a reputable name, all four are also offering the best rates among the major high street banks.

If the very top rate is your priority, then the one-year fixed-rate cash ISA can be beaten by Cynergy Bank paying 4.7 percent.

The two-year fixed-rate cash ISA by Cynergy Bank pays 4.75 percent. Coventry Building Society has a fixed-rate agreement that pays 4.63 percent for two years.

Tandem Bank beats its three-year fixed-rate contract by paying 4.78 percent. In the meantime, only Hinckley and Rugby Building Society (4.82 percent) can defeat its five-year fixed-rate cash ISA.

Though, if you have a large sum and do not think you need it for five years or more, investing it could make better sense.