Millions of savers who locked money away in fixed-term accounts a year ago risk missing out on hundreds of pounds of interest unless they move the cash when the accounts mature.
Approximately £12.2 billion was paid into fixed-term accounts in October 2022 as savers locked in to the best savings rates for years.
But as these products mature, savers need to act to avoid their money being rolled over in to less-generous accounts, some of which pay as little as 0.1 per cent.
Banks are required by the regulator to contact customers towards the end of their account term to outline the options available and what they need to do before their deal ends.
For example, savers would be earning 3.15 per cent on up to £20,000 if they had locked into the top-paying one-year fixed rate Isa last October — Castle Trust Bank Fixed Rate e-Cash Isa.
Approximately £12.2bn was paid into fixed-term accounts in October 2022 as savers locked in to the best savings rates for years – but these accounts have now matured
However, unless savers move their money on this account when it matures, it will be automatically rolled on to the bank’s Easy Access Cash Isa, which pays just 0.1 per cent.
On a £10,000 nest egg this would equate to just £10 in interest after one year, compared with £560 if they reinvested the cash into the bank’s latest one-year fixed rate Isa.
Last year High Street giant Santander was offering savers a return of 3.7 per cent with its one-year fixed-rate Isa.
But once the account matures, savers who do not move their funds will be rolled onto the bank’s easy-access Isa Saver account, with a rate of 1.2 per cent.
If they reinvest the cash into another one-year fixed-rate Isa they could enjoy a rate of up to 5.6 per cent. On £10,000 worth of savings this is a difference of £440 a year in interest.
Inertia is savers’ enemy and banks depend on it, says Anna Bowes, of rate analyst Savings Champion. ‘Savers need to be proactive to keep their cash working hard,’ she says. ‘Keep a note of key maturity dates to avoid missing out,’ she adds.
Savers who secured a top rate a year ago will find that they can lock into a higher rate today, says Rachel Springall, finance expert at rate scrutineer MoneyfactsCompare. ‘Savers will need to act quickly to apply for market-leading offers as there is no guarantee they will stay on the shelf for long,’ she says.
UBL has a best-buy fixed-rate cash Isa paying 5.86 per cent for one year for customers who want to lock away more than £2,000.
Savers can also earn 6.2 per cent interest on balances above £500 with a one-year Guaranteed Growth Bond from National Savings and Investments. All NS&I deposits are protected by HM Treasury.
Competition among banks has also driven up savings rates, with Nationwide last month launching a market-leading regular savings account that boasts a rate of 8 per cent. Current account customers can save up to £200 a month into the online-only account and can make three withdrawals within the 12-month term.
Yorkshire Building Society customers can save up to £500 a month into its Loyalty Regular eSaver account, which has an interest rate of 7 per cent.
