Check your fixed rate bonds and reap savings rewards
Savers with fixed rate bonds coming to an end need to start looking at options for their saving pots, according to research from MoneySupermarket.com.
Analysis from Britain's number one comparison site shows savers could miss out on up to £511 if they fail to switch products once their fixed rate bond expires. The analysis looked at the interest across a number of bonds both during their term and once expired, and calculated the interest that could be saved by switching to find a better deal. For example, someone who invested £15,000 in Turkish Bank's One Fixed Rate Bond in 2010, the interest earned during year one would have been £435 on an AER of 2.9 per cent. However, once this bond matures the AER drops to 0.1 per cent, meaning they could be missing out on £420 in additional interest in year two.
Yet by switching to a competitive rate such as Cheshire Building Society or United National Bank's Fixed Deposit account with an AER of 3.51 per cent, someone could achieve £526.50 in interest on maturity- an increase of £511.
Kevin Mountford, head of banking at MoneySupermarket said: "Since the financial crisis, Autumn has been a peak period for people renewing fixed rate bonds and many savers will be seeing their bonds reach maturity over the next two or three months. With the products on offer this Autumn even more competitive than last, consumers looking to move savings should act now to take advantage of strong rates.
"Savers cannot always rely on their banks to remind them their product term has come to end, so they must be vigilant and go as far as writing it in their diary or sticking a post-it note on the fridge to remind them. If you fail to respond to any maturity notification or fail to act, some providers will automatically enroll you into another bond, tying your savings up for the term of the product, or they will place your savings in an account paying a poor rate of interest. Our analysis shows a significant amount can be saved simply by shopping around for a better deal, so it really pays to be alert. The fixed rate bonds that are currently available represent a great way of maximising returns as long as savers can afford to lock their money away for the term, and remember to check when the term matures.
"With signs indicating Base Rate will remain low for the foreseeable future, locking money away for a fixed term of even a year could be a good option for savers looking to get some extra bang for their buck. It's important to remember that once the introductory offer has ended and the product has served its purpose, it's time to get online, shop around and switch to a more competitive deal. Savers need to be quick as some of the best products may not be available for long."