The best fixed interest rates to switch to now: Savers stand to lose £500 if they don’t act
Millions of savers who locked money into term deposit accounts a year ago risk missing out on hundreds of pounds in interest if they don’t move the money when the account matures.
In October 2022, around £12.2 billion was deposited into fixed-term deposits as savers secured the best savings rates in years.
But as these products mature, savers will need to act to prevent their money from being transferred to less generous accounts, some of which pay as little as 0.1 percent.
The regulator requires banks to contact their customers towards the end of the account term to explain the options available and tell them what they need to do before the contract ends.
For example, savers would earn 3.15 per cent on up to £20,000 if they had locked into the Isa with the highest paying one-year fixed rate – Castle Trust Bank Fixed Rate e-Cash Isa – last October.
However, unless savers transfer their money to this account when it is due, it will automatically be transferred to the bank’s Easy Access Cash Isa, which pays just 0.1 per cent.
With a nest egg of £10,000, this would equate to just £10 in interest after a year, compared to £560 if they reinvested the money in the bank’s latest one-year fixed rate ISA.
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Around £12.2 billion was deposited into fixed-term deposits in October 2022 as savers secured the best savings rates in years – but these accounts have now matured
Last year, high street giant Santander offered savers a 3.7 per cent return on its one-year fixed rate Isa.
However, once the account matures, savers who do not transfer their money will be transferred to the bank’s easy-access Isa Saver account at an interest rate of 1.2 percent.
If they reinvest the money into another one-year fixed rate ISA, they could benefit from an interest rate of up to 5.6 per cent. On £10,000 worth of savings this equates to an interest rate difference of £440 per year.
Indolence is the enemy of savers and banks rely on it, says Anna Bowes from interest rate analyst Savings Champion. “Savers need to be proactive to keep their money working hard,” she says. “Make note of key due dates so you don’t miss anything,” she adds.
Savers who secured a top interest rate a year ago will find they can secure a higher interest rate today, says Rachel Springall, financial expert at rates checker MoneyfactsCompare. “Savers need to act quickly to claim market-leading offers as there is no guarantee they will stay on offer for long,” she says.
UBL has a Best Buy fixed rate cash Isa that pays 5.86 per cent for a year for customers looking to save more than £2,000.
Savers can also earn 6.2 per cent interest on balances over £500 with a one-year guaranteed growth bond from National Savings and Investments. All NS&I deposits are protected by the UK Treasury.
Competition among banks has also driven up savings rates, with Nationwide last month launching a market-leading regular savings account with an interest rate of 8 percent. Current account customers can save up to £200 a month on the online-only account and make three withdrawals within the 12-month term.
Yorkshire Building Society customers can save up to £500 a month on their Loyalty Regular eSaver account, which has an interest rate of 7 per cent.