Paragon Bank has launched a new 15-month fixed-rate cash ISA paying 4.28 per cent AER, currently the highest rate available for this term.
The product went live on 12 June through the bank’s online platform and arrives as savers look to lock in strong returns ahead of a potential shake-up to ISA rules in the Autumn Budget.
The launch comes as Bank of England data reveals that savers deposited £14 billion into ISAs in April 2025, the highest monthly total since records began in 1999.
Andrew Wright, Head of Savings at Paragon Bank, said: "We’re delighted to be able to offer a market-leading product for our 15-month ISA, especially as it gives customers the opportunity to hold tax-free savings for longer than standard 12-month options."
The 15-month term gives savers more certainty at a time when interest rates are expected to fall, making the product especially appealing to those seeking fixed returns.
At the same time, Chancellor Rachel Reeves has confirmed the £20,000 annual ISA allowance will remain in place, but signalled that other reforms could be introduced that affect how savers use it.
Reeves said: "I’m not going to reduce the limit on what people can put into an ISA, but I do want people to get better returns on their savings, whether that’s in a pension or their day-to-day savings."
Reeves also said: "At the moment, a lot of money is put into cash or bonds when it could be invested in equities, in stock markets, and earn a better return for people."
Her comments have prompted concern that while the total tax-free ISA allowance may stay at £20,000, the portion that can be saved in cash could be reduced.
Fears of a cash ISA clampdown are prompting many to secure fixed rates before potential rule changes
GETTYThis would encourage more people to shift towards stocks and shares ISAs, potentially limiting options for those who prefer safer, fixed-rate products.
Wright said: "This rate will undoubtedly be popular with customers, as it’s currently the best on the market. In today’s unpredictable financial landscape, it’s essential to find a safe and steady way to grow your savings."
He added: "Unlike stocks and shares, which have experienced significant volatility recently, fixed-rate cash ISAs offer a secure and reliable way to increase your savings."
ISAs are useful tools for those looking save and avoid paying taxGETTYCash ISAs remain the most widely used tax-free savings product in the UK, with around £300 billion currently held in them.
However, proposed reforms could bring the most significant changes to the ISA system since its creation in 1999.
Fidelity International has proposed merging cash and stocks and shares ISAs into a single product, eliminating the need to transfer funds between different providers.
Meanwhile, some City groups have called for a cap on how much can be held tax-free in cash ISAs, to shift incentives toward long-term investment.
Cash ISAs remain the most widely used tax-free savings product in the UK, with around £300 billion currently held in them
GETTYReeves said: "I absolutely want to preserve that £20,000 tax-free investment that people can make every year."
However, her remarks leave the door open to changes that could reduce the cash component of that allowance while keeping the total limit unchanged.
Industry experts say this would represent a major shift in how ISAs work, especially for savers who rely on fixed returns.
With speculation building around the Autumn Budget, savers may see Paragon’s 4.28 per cent ISA as a timely opportunity to secure a strong rate in case changes are announced later this year.
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