Savers - Turn Over a New Leaf on Your Expiring Fixed Rate Bond This Autumn

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Sep 10, 2012, 11:10 ET

CHESTER, England, September 10, 2012 /PRNewswire/ --

Savers could miss out on almost £500 by failing to check when their bond expires
Failure to act to a maturity notification could see savings tied up into another bond or low interest savings account

Savers whose fixed rate bonds are due to mature should be prepared to look for new options to maximise their saving pots, according to analysis from MoneySupermarket.com.

Britain's number one comparison site shows savers could miss out on over £477** if they fail to switch products once their fixed rate bond expires. MoneySupermarket 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, for someone who invested £15,000 in Cheshire Building Society's market leading one-year fixed rate bond in 2011, the interest earned during year one will be £526.50 on an AER of 3.51 per cent. However, if they opt to renew into the current Cheshire Building Society one year savings bond which pays 2.50 per cent AER, they will earn only £375 in interest over the next year.

Yet by switching to a more competitive rate this Autumn, such as State Bank of India's one year fixed rate bond with an AER of 3.33 per cent, someone could achieve £499.50 in interest on maturity next year.

Kevin Mountford, head of banking at MoneySupermarket said: "Five years on from the start of the financial crisis, savers will have continued to struggle against a low interest rate, combined with the eroding effect of high inflation, which has made it difficult to gain a positive real return on savings. However, this means that consumers should make the most of every opportunity to act and take advantage of strong rates once bonds mature.

"Autumn has traditionally 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. 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. Our analysis shows a significant amount can be saved simply by shopping around for a better deal, so it really pays to be alert.

"Being vigilant and writing a reminder in the diary is important as savers can't always rely on their bank to remind them their product term has come to end. Some providers will automatically enrol you into another bond if you fail to respond to any maturity notification or fail to act, locking away your savings for the term of the product, or they could be placed in an account paying a low rate of interest.

"It's important to remember that once the bond reaches maturity, 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."

Notes to editors

*Fixed rate bond Comparison - based on £15,000

** For example, someone who did not switch from the Aldermore fixed rate account reaching maturity this October would receive an AER of only 0.15% after maturity, or £22.50. State Bank of India's one year fixed rate bond with an AER of 3.33 per cent could achieve £499.50, a difference of £477.

Table to show fixed rate bonds 2012 as at 10^th September 2012

                            Account
                            (Terms &
                           Conditions
         Provider            Apply)        Term Minimum Deposit     AER
    State Bank of India  Fixed Deposit   1 Year       GBP10,000   3.33%
                          Select Gold
      Close Brothers     Fixed Account   1 Year       GBP10,000   3.30%
                           Fixed Term
            UBL             Deposit      1 Year        GBP2,000   3.25%
                          Growth Bond
        Post Office         Issue 18     1 Year          GBP500   3.25%
                           Fixed Rate
         Aldermore          Account      1 Year        GBP1,000   3.25%
                                                        Average   3.30%

Table continues

         Provider       AER after maturity Interest on maturity
    State Bank of India                N/A            GBP499.50
      Close Brothers                   N/A            GBP495.00
            UBL                        N/A            GBP487.50
        Post Office                  0.10%            GBP487.50
         Aldermore                     N/A            GBP487.50

Sourced on 10.09.2012 by MoneySupermarket.com

Table to show fixed rate bonds 2011 as at 3^rd October 2011

                                Account
                          (Terms & Conditions
          Provider              Apply)          Term  Minimum Deposit   AER
    Cheshire BS             Fixed Rate Bond    1 Year          GBP100 3.51%
    United National Bank Fixed Deposit Account 1 Year        GBP2,500 3.51%
    Aldermore             Fixed Rate Account   1 Year        GBP1,000 3.46%
    Skipton BS             Fixed Rate E-Bond   1 Year          GBP500 3.45%
    Post Office           Online Bond Issue 5  1 Year          GBP500 3.41%
                                                              Average 3.47%

Table continues

                                                           Interest
                                              Interest on     after
          Provider       AER after maturity      maturity  maturity Difference
    Cheshire BS                         N/A     GBP526.50       N/A        N/A
    United National Bank                N/A     GBP526.50       N/A        N/A
    Aldermore                         0.15%     GBP519.00  GBP22.50  GBP496.50
    Skipton BS                        0.50%     GBP517.50  GBP75.00  GBP442.50
    Post Office                       0.80%     GBP511.50 GBP120.00  GBP391.50

Sourced on 03.10.2011 by MoneySupermarket.com

MoneySupermarket.com compares (at 30^th August 2012)

107 car insurance providers and 82 home insurance providers
12 broadband providers and 18 energy providers
32 unsecured loan and 6 secured loan providers
62 mortgage lenders and 28 credit card providers
66 savings providers and 37 current account providers.
Over 1,200,000 mobile phone deals

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