Castle Trust Bank has raised the interest rate on its fixed Cash ISA to 4.49%, earning an “excellent” Moneyfactscompare rating.

The interest rate is fixed for one year and savers need a minimum deposit of £1,000 to launch the account.

Fixed rate Cash ISAs have grown in popularity recently in the high interest rate environment and fixed tax allowances. A Cash ISA is a type of savings account that allows UK residents to save or invest without paying tax on the interest earned, up to an annual limit of £20,000 for the 2024/25 tax year.

The accounts offer a valuable way to maximise tax-free savings, especially for those who might otherwise exceed their Personal Savings Allowance and face tax on interest from regular savings accounts.

Fixed accounts enable savers to lock in the interest rate offered at the start of the term, which are particularly valuable while interest rates are falling.

The average one-year fixed ISA currently offers 4.06% interest according to Moneyfactscompare, making Castle Trust Bank’s deal notably more competitive for savers seeking higher returns.

Commenting on the deal, Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk, said: “Castle Trust Bank has increased the rate on its one-year Fixed Rate e-Cash ISA this week, which improves its position within the market.

“The account pays 4.49% and may well appeal to savers looking to utilise their ISA allowance and receive a guaranteed return on their investments.

“Although earlier access is permitted, savers may wish to note this is subject to account closure and 90 days’ loss of interest penalty.

“In more positive news, further additions are permitted for 14 days from the account opening but it is crucial that savers fund their account with a minimum of £1,000 within this period, otherwise no interest payment will be made, and their money will be refunded.

“On assessment, the account secures an Excellent Moneyfacts product rating.”

While Castle Trust Bank may be offering an appealing deal, it isn’t quite topping the table for one-year fixed Cash ISAs.

Hampshire Trust Bank places just ahead with an Annual Equivalent Rate (AER) of 4.5% on its One Year Online ISA Fixed Saver (Issue 35).

Savers can get started with a much smaller opening deposit of £1 and interest is paid on the anniversary. Earlier access will be subject to 90 days’ loss of interest.

Placing just behind and offering the same rate as Castle Trust Bank is Shawbrook Bank’s One Year Fixed Rate Cash ISA Bond (Issue 111).

Savers need a minimum deposit of £1,000 to launch the account and interest is paid on maturity. Earlier access to funds in this account will also be subject to 90 days’ loss of interest.