Analysis by savings provider Shawbrook Bank found over £34bn is currently sitting in fixed-rate accounts that are about to reach the end of their term. But that cash is unlikely to see much future growth if savers don't pay attention - that's because many of these bonds revert to a product with a lower rate once the term is up.
Here, Which? reveals the cost of not taking action and what to do with your pot when it matures.
What happens when fixed savings mature?
The small print of your fixed-rate account will explain what happens once the term ends or 'matures', including ways to withdraw the money or reinvest it.
Even if you missed these details when you initially took out the account, the bank should get in touch directly to discuss your options before maturity.
In the event that you don't let the bank know what you want to do next - either because you missed the emails or forgot to reply - the provider will usually move the lump sum into a different account.
While some may roll the money over into one of their easy-access accounts, others lock the cash away again in another fixed-rate product, preventing you from switching to a higher rate elsewhere. Many banks, however, will simply pay the money back into the current account you transferred the cash from in the first place.
Trouble is, whatever new account your savings end up in, they will likely pay a lower rate of interest.
How much could you miss out on?
The last couple of years have seen interest on fixed bonds skyrocket, but although rates are significantly higher than this time last year, they have been steadily dropping since last autumn.
Savers whose accounts mature over the next couple of months should therefore act now to grab the best deal before interest falls even further.
Moneyfacts data shows the average rate for a one-year fix was 4.6% AER on 1 April. While average interest offered on a longer-term bond was 4.13% AER. It means someone opening a one-year account that pays today's average rate, with a deposit of £10,000, will earn £470 over the course of 12 months. Fixing for five-years at the current average rate for a long-term bond, with the same lump sum, would earn you £2,289 in interest.
On the other hand, if your money is moved to an easy-access account and you're lucky enough to get the current average rate of 3.11% AER, you'd be £155 worse off than if you'd opened an average one-year fix or £1,680 with a five-year bond. That's assuming you didn't touch the money within that period.
Falling inflation also means savers can now see their nest eggs grow faster than the rate at which prices for goods and services are rising.
Moneyfacts data shows 1,364 savings accounts currently offer rates that match or beat the current CPI figure of 3.2% for March 2024. That includes deals on easy access, notice accounts, variable rate products, fixed-rate bonds and Isas.
It's quite the contrast from this time last year, when in April 2023, there were no deals that could beat the CPI rate of 10.1%.
Find out more:Ways to make the most of your 'mature' savings
Switching to a higher interest deal may be the most important step to take to make sure your savings are working as hard as possible. But it's not the only thing to consider when your fixed-rate account reaches maturity.
Open an Isa
Don't forget, there is a limit to how much interest you can earn before receiving a bill from HMRC.
So if you have a large sum to reinvest, you might want to also consider opening an Isa account which allows you to deposit £20,000 a year, tax-free.
Rates on cash Isas are currently booming, with average interest on a one-year fixed Isa standing at 4.51% AER. While the current average rate for an easy-access Isa is at its highest point in more than 15 years, offering 3.38% AER.
Find out more:Consider compounding
Compounding can be a powerful way to grow your savings. It means as well as earning interest on the savings, you also earn interest on the interest itself. Therefore, every year that the money is in your account you are earning interest on each previous year's interest.
According to Adam Thrower, head of savings at Shawbrook, the key is to re-save both the initial deposit or balance you fixed and the interest earned on the balance so you can maximise your earnings.
For example, if you saved £10,000 in an account paying 4.6% AER, over 12 months you would have earned £470 in interest. But re-saving the full amount - deposit and interest - could see you earn £492 in interest over the following year.
'So over 24 months you could make over £900 by just moving your money and reinvesting the first year’s interest – not bad for a couple of minutes work,' he explains. 'And, if you aren’t saving for anything in particular you can rinse and repeat the following year: earning interest, on interest, on interest.'
Keep track with a savings platform
If you are spreading your savings around and opening multiple accounts, then consider signing up to a savings platform. These websites not only help you source market-leading accounts, but once you're registered, you'll only have one set of login information to remember. And to ensure your savings don't languish in a low-paying account - the platform will usually get in touch to remind you when any bonds are due to mature.
However, the convenience offered by savings platforms comes with a few caveats. Because savings platforms work with a set number of banks and building societies, you could easily miss a top rate offered by a provider not listed on the website.
Also, watch out for fees. While some platforms such as Raisin and Aviva Save are free to use, others charge a 'platform fee' for their services. That's often taken as a cut of the interest offered, done before displaying the rates on its site. Others, like Akoni, take a percentage of your savings - how much varies though.
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