Don't be caught cold when your fixed rate bond matures

Fixed rate bonds are a great way for savers with a lump sum to generate a good level of return in this low rate environment. However, once these bonds mature, providers will often shift money into a standard easy access savings account, so it's vital to keep an eye on your money and act when your original deal comes to an end.

For example, savers who took out the five year fixed rate bond from Capital One back in 2004, will now see their interest rate drop by 5.1 per cent, meaning a £15,000 deposit now earns £765 less per year in interest.

And savers who took out a one year fixed rate bond with Firstsave a year ago would see their interest rate drop by more than six per cent on maturity, meaning someone with a £15,000 savings account would get £953 less per year in interest.

Kevin Mountford, head of banking at moneysupermarket.com, said: "Fixed rate bonds have for a long time offered savers who are willing to lock away large cash deposits for a certain period of time, excellent rates of return. However, it is crucial that people keep an eye on their bonds, and be aware of when they mature, otherwise they're likely to lose out on a significant amount of interest, as providers often move the money into a standard paying low rate savings account when the deal ends.

"However, there is inconsistency amongst providers, and savers that invested in a three year fixed deposit account at 5.6 per cent AER from United Trust Bank in 2006 would actually fare quite well now - as their money would be shifted to another fixed rate account, exclusive to existing customers, offering a very competitive four per cent when their bond matures.

"The clear message for consumers is to understand the terms and conditions of their fixed rate bond and be aware that when their rate expires, as they may need to move their money to avoid a poor rate of interest. Savers should be wary of locking away their money for any longer than a year or two, but there are some great rates being offered at the moment and consumers could grab themselves a good deal if they shop around."