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Which? investigates fixed-rate savings accounts

Watch out at the end of your fixed-rate deal

A Which? Money investigation into what happens when a fixed-rate savings account term ends has uncovered poor practice and unclear information by certain banks and building societies. 

Fixed-rate savings accounts pile of money

Your savings could be dumped in a poor-paying account at the end of the fixed term

The end of a fixed-rate savings bond

Our research reveals that you could find your savings dumped into an account paying as little as 0.1% interest; or worse, rolled into another fixed-rate savings account with only a short window of opportunity to withdraw your money before it’s locked in again. 

The AA, Aldermore, Barclays, Clydesdale, Lloyds TSB, National Counties Building Society, Norwich & Peterborough Building Society, Skipton Building Society and Yorkshire Bank stand out as some of the worst offenders.

Rollover fixed-rate savings accounts

When your fixed-rate savings account ends, your bank or building society will write to you and outline your options. But if you don’t respond to that letter – perhaps because you’re away or you simply forget – your savings will be put into a rollover account.

Some banks roll your money into an easy-access account paying barely any interest.  The AA and Norwich & Peterborough Building Society were the worst offenders of the companies we surveyed, paying just 0.1% on balances up to £50,000.  

Other banks roll your savings into another fixed-rate bond, usually of the same length as the original.  That’s all well and good if you’re happy with the rate on offer and want to tie-up your money again.  But if you need access to your money it can cause problems.  

With some fixed-rate rollover accounts you can withdraw your money at any time, subject to a penalty.  But with others your only chance to get your money out is during the cooling-off period.  

Aldermore, Barclays, Lloyds TSB, National Counties BS and Skipton BS don’t allow withdrawals after the cooling-off period and also have some of the shortest cooling-off periods.  

Which? calls for improvements to fixed-rate savings accounts

Principal money researcher, Melanie Green said: ‘Banks and building societies need to make their fixed-rate maturity arrangements as fair and transparent as possible.  We think this means sending maturity letters at least 30 days before the fixed-rate ends, providing clear maturity letters, giving a cooling-off period of at least 30 days for fixed-rate rollovers, ensuring all fixed-rate rollover accounts allow withdrawals after the cooling-off period and paying decent rates of interest on easy-access rollover accounts’.  

If you’re coming to the end of a fixed-rate savings account, compare how your bank’s rates compare to the best on offer by going to our review of fixed rate savings accounts. 

pound coins

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