Why Has the Interest Rate on Top Three Year Fixed Rate ISA Dropped?

Written by Karen Bryan

In late October 2017 I was thinking of opening a three year fixed rate Cash ISA with Clydesdale Bank. The account paid a rate of 2.2%. The account was also available from the Yorkshire Bank.

However, I judged that as the Bank of England was hotly tipped to increase the Base Rate in early November 2017, that I should hang fire in the hope of an increase in the interest rate paid on the three year fixed Rate ISA.

Well, I certainly got that wrong. A couple of months later in early January 2018, the highest rate available on three year fixed rate Cash ISA is 1.86% with Charter Savings Bank.

That’s a drop of 0.34%, when the Bank of England Base Rate increased by 0.25%. It rather defies logic.

At least, I was still able to find a non-ISA three year fixed rate savings account which paid 2.2% with National Savings and Investments. But I would have preferred to open an ISA account to ensure that some of my savings remain tax-free.