When a fixed rate bond comes to maturity, savers need to act fast to find the next one that offers the best deal, moneysupermarket.com has urged.
Taking no action when fixed rate bonds mature is "not an option" says the comparison website, because it could see the customer's savings languish on a low rate, costing the saver valuable interest.
Consumers are drawn to fixed rate bonds for obvious reasons – the security of a fixed rate and a competitive return compared to instant access accounts – but moneysupermarket has warned savers that they could lose hundreds of pounds in returns if they fail to move their funds when their fixed rate comes to an end.
Providers differ in how they treat their customers' accounts when fixed rates come to an end – some will give the money back to reinvest, others place it in an equivalent bond, but some will move the money into a default account paying a low rate.
Interest rates can fall to nearly nothing, moneysupermarket's research has found, paying more than five per cent one minute and less than one per cent the next, when it reaches maturity, costing around £500 a year in interest on a £10,000 balance.
Providers should notify customers when their fixed rate bond reaches maturity to inform them of their options, moneysupermarket argues.
Commenting, Kevin Mountford, head of banking at moneysupermarket.com, said: "Many savers will have investments sitting in bonds paying good rates of interest as there was, and still remains, healthy competition among banks and building societies to secure longer term investment balances."
But, he added, "it is easy to lose track of time and forget that your bond is coming to maturity and the consequences of not taking action can really hit you in the pocket."
Mr Mountford urges savers to contact their provider to establish the date when their fixed rate bond will mature, compare fixed rates bonds so that they are prepared to switch to an account paying higher interest as quickly as possible when their fixed rate deal ends.
"Although you are unlikely to find rates as high as was paid four or five years ago, fixed rate bonds continue to give good levels of returns at a time when interest rates are low," he said.
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