More than £116 billion in fixed-rate savings accounts is set to mature by the end of the year – and many people could be losing out on hundreds of pounds if they don’t act soon
More than £116 billion in fixed-rate savings accounts will mature by the end of this year, putting millions of savers at risk of seeing their interest earnings almost halved. Analysis of CACI’s monthly savings data reveals that £58.9 billion is currently held in non-ISA accounts and another £57.5 billion in ISAs, with over 3.5 million accounts facing a sharp drop in returns unless action is taken.
The average interest rate on these maturing accounts is around 4.5% and when a fixed-rate deal ends, many banks automatically transfer your money into a lower-interest account, which for the average saver could mean losing hundreds of pounds a year.
If savers do nothing, their money is likely to be moved to a variable-rate account, currently paying only about 2.4% for non-ISAs and 2.7% for ISAs. So to avoid losing out, savers are urged to check their accounts and shop around for better rates before their deals expire.
The analysis was carried out by Skipton Building Society, which also commissioned research of 2,000 adults and revealed 39 per cent rarely or never move their money around.
Of these, 21 per cent find the process too complicated, while 18 per cent prefer to keep their money in one place. But 12 per cent worry about losing access to their funds if they were to transfer them – with 31 per cent suffering from ‘money moving paralysis’.
Alex Sitaras, head of savings and partnerships at the building society, said: “Too many savers are missing out on money simply by standing still.
“These findings show just how vital it is to protect savers from rate shocks at the end of their term. We believe in fairness – so where possible, we aim to transfer the majority of our customers onto another fixed-rate option at the end of the fixed rate period.
“However, when the fixed term comes to an end, we are mindful that this may be a lower rate than they started with, so we encourage all our members to come and have a conversation with us to see what option is right for them.
“It is crucial to stay alert when your fixed-rate savings mature – better rates options are worth shopping around for and can make a real difference to your savings.”
The research also revealed that nearly one in 10 never monitor the interest rates on their savings accounts. Furthermore, 18 per cent admitted they lack knowledge of what rates are on offer.
For 16 per cent they haven’t opened a new savings account in the past five years, with 22 per cent claiming it’s too much hassle to switch. Meanwhile, 19 per cent worry they might make the wrong decision if they attempted to change.
For 62 per cent they have opened an account only to see the interest rate drop after a certain period leaving them disappointed and annoyed.
The study found that when their account reaches ‘maturity’, 59 per cent transferred their money to a fresh account. However, 10 per cent of people chose to leave their money where it was.
Among those who did move their money, 62 per cent opted for the provider offering the highest rate, while 35 per cent prioritised access to their funds.
Alex Sitaras added: “Far too often, savings accounts that began with competitive interest rates end up quietly drifting onto low variable rates and many savers don’t even realise it. That means they could be missing out on the opportunity to earn more from their money.
“While it’s encouraging to see some people actively managing their savings, not everyone feels confident navigating their options. That’s why guidance matters – and we why offer a free money advice service to help people plan ahead and make smarter decisions about their finances.
“But for those with savings of £20,000 or more, moving money into a pension or investment could be a better long-term option, provided they are happy to take some risk with their money.
“So being able to also provide face-to-face regulated financial advice on the high street, can present longer-term solutions like pensions or investments, which can offer the chance for stronger returns and greater financial security.”