Fixed rate fallout - Don't let them catch you out

29th June 2012

94 billion reasons to love SavingsChampion - a blatant plug and a gratuitous Olympics reference!

Olympic competitors aren’t the only ones facing big hurdles this year.  Fixed rate savers must race for decent rates - as a bumper crop of bonds mature - or let us do the hard work.

Our little fingers are worn down inputting and updating fixed rate savings info onto our trusty computer.  And no wonder - new research shows almost five million fixed rate bond products mature this year.  That’s £94 billion of savings cash in need of a new home.

Savers need to keep their eye on the ball - and not let the maturity date pass without taking action - if they want to find a decent new fixed rate savings deal.  Or, better still, let us do it for them with our Rate Tracker - a free service of truly Gold Medal standards (well we like to think so).

According to those good people at HSBC, a ridiculous two million one year bonds have matured, or are about to mature, this year.  Savers have stashed just over £50 billion (or about £815 each for every man, woman and child in the UK) in these products.  Now they need to find a new home for their cash. *

HSBC says one year rates have actually improved since a year ago - but not by much.  It says one year bond rates are up a mere 0.09%, which means you’d earn an extra 90 pence interest for every £1,000 invested, and that’s before tax!

Don’t knock it, every little helps.  Most rates have actually dropped - particularly those longer term four and five year bonds.  Four year rates have dipped 1.88%, five year bonds by 1.32%.  Seeing as rates are pretty low in any case, that’s a big drop.  HSBC calls it a savings precipice - dramatic stuff indeed?

More importantly, what can savers do about it?  The good news is that all the banks and building societies at least let you know when your fixed rate bond is set to mature.  They’re not being nice for the sake of it, they want to keep hold of your money.  So undoubtedly you’ll be offered a range of new deals to keep you on board.  We say treat them with a pinch of salt.

If you do nothing - and plenty of people take this option - your money is either returned by Barclays or rolled over into new fixed rates by Santander and Lloyds. 

Santander’s one year rollover bond pays 2.75%, but 1.75% of that is a ‘reward’ bonus (by which we think they mean a reward for not shopping around for a better rate).  Santander’s online offshoot, Cahoot, will pay you 3.60% over one year, if you’ve got £25,000 to save.

The Lloyds one year rate is even meaner - a mere 2.25% max.  You’re better off moving to Cahoot or the not-quite-top-of-the-league Clydesdale Bank offer (via Governor Money) paying 3.50%.

If those rates look stingy, you should see what other fixed rate customers get at maturity, if they don’t make an effort to shop around.  Nationwide drops you in a Capital Builder account paying an insulting 0.20%.  That won’t build much capital, will it?  And shame on Halifax too - it pays an almost invisible 0.10% on its Matured Fund Account.

Now, you would have thought that HSBC would be a beacon of loveliness and integrity in all this fixed rate maturity lark.  After all, why go to all that effort adding up this year’s maturities and writing a press release about it?

But, you’d be wrong.  HSBC simply returns money to your ‘servicing account’ - the one you set up originally to pay money into the bond.  If that account is an HSBC current account, you’ll get 0% per year and hardly much more in its general savings accounts.  The best rate we could find for those was 0.75%.

The obvious answer is to shop around the moment you get your bond maturity notification.  If you don’t get the letter, dig out any info you have and let the bank know if you’ve moved house, changed your name or other details. 

Our best buy tables are on the website of course - but remember, fixed rate offers don’t last for long, some get over-subscribed and best buys change on a regular basis.  We update our site daily so keep checking back as maturity approaches.

Or if that sounds like too much faff, simply sign up for Rate Tracker.  It’s free (as you may know)  and it’s quick and easy to use. 

Just locate your bank or building society in our drop down list and fill in your maturity date details.  We’ll do the rest and let you know which are the best deals around, as that maturity deadline approaches.  So there’s no need to fall off HSBC’s precipice and there are 94 billion reasons to think SavingsChampion should get gold, silver and bronze at the Olympics this year.

OK, so that was a rubbish Olympics-link but here’s a better link - you can sign up for Rate Tracker right here.

*Source, HSBC Press Release “HSBC reveals £124 million savings precipice faced by UK” dated 16 June 2012

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