Two million savings accounts are set to mature: where should you put your money next?

New research by Shawbrook Bank shows that more than £73bn is sitting in two million fixed bonds and Isas that are due to mature before the end of 2024.

Savings rates aren't hitting the record highs seen this time last year, but if you don't switch when your account is unlocked, you could miss out on hundreds of pounds in interest.  

Here, Which? explains what happens when the term of a fixed account expires, and offers tips on where you should move your money to next.

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What happens when fixed savings mature?  

The small print of your savings account should explain what happens once the fixed term ends, including ways to withdraw your money or reinvest it. 

Even if you missed these details when you took out the account, the bank should get in touch directly to discuss your options.

In the event that you don't let the bank know what you want to do next, the provider will usually move the lump sum into a different account.

Most banks will simply pay the money back into your current account, but there are exceptions. Some roll the money over into one of their easy-access accounts, while others may lock the cash away in another fixed-term product. This would prevent you from switching to a higher rate elsewhere. 

Whatever account your savings end up in, it will likely pay a lower rate of interest. So it's important to be on the ball and make sure your money is working as hard as possible.

Where to put your savings next?

Unless you really need the cash, the best place to put your lump sum and interest income is back into a savings account. 

But although rates are significantly higher than this time two years ago, they have been steadily dropping.

According to Moneyfacts, the average rate on a one-year fix has plummeted by over one percentage point, from 5.42% AER on 1 October 2023 to 4.31% on 1 October 2024. 

The average interest offered on bonds lasting more than a year has also dropped dramatically over the same time period, from 5.11% AER to 3.93%.

Savers who were unable to snap up one of the few remaining short-term deals boasting 5% interest will be disappointed to know that, for the first time this year, there are now no fixed bonds offering a rate that high. 

Savers whose accounts mature over the next couple of months should therefore act now to grab the best deal before rates fall even further. 

Here are five tips to help you find the right account, whatever your savings goals and circumstances:

1. Fix again – but for how long?

Shorter-term bonds currently offer better interest rates. This is because providers are currently adjusting rates based on what might happen to the base rate in the future. Banks don't want to be stuck paying a top rate over the next few years if it looks like the base rate is going to drop to less than that well before the account matures. 

Rates on fixed savings accounts lasting more than a year tend to be slightly lower, but the main benefit of locking your money away for longer is it guarantees you the same rate for years to come, regardless of what's going on in the rest of the market.

• Find out more: best savings accounts

2. Go variable for the very best rates

You can still find rates of more than 5% AER if you opt for a variable rate account. But remember, providers can cut the interest offered on these deals whenever they like, so your money might not grow at that pace for long. 

Savers with variable bonds will also need to put up with a few restrictions. For example, some top-rate products may limit the number of withdrawals you can make. These are called 'limited access' accounts. 

Others, called 'notice accounts', require you to tell your provider in advance that you want to take your cash out. 

3. Unlock higher rates via your current account

Some top savings rates are reserved for existing customers. This usually means having a current account with the provider, but you may also be eligible if you have another financial product such as a mortgage, savings account or investment account.

If you're thinking of switching or opening a new account to unlock a good rate, take a close look at the terms for any restrictions. 

For example, some providers require you to have been a customer for a minimum time period, such as a year. 

4. Avoid the savings tax trap with an Isa

Don't forget, there is a limit to how much interest you can earn on your money before you face a tax bill.

The personal savings allowance means basic-rate taxpayers can earn up to £1,000 a year in savings interest tax-free, while higher-rate taxpayers get a £500 limit. Additional-rate taxpayers have no personal savings allowance.

So if you have a large sum to reinvest, you might want to also consider opening an Isa, which allows you to deposit £20,000 a year tax-free. 

While rates are no longer quite as high as they were a few months ago, a whopping 95% of cash Isas paid more than the August rate of inflation (2.2%) when we checked on 23 September.

• Find out more: best cash Isas

5. Switch to a smaller bank

The best rates are currently offered by smaller challenger and Islamic banks. Indeed, our analysis of rates between January and June found popular high street banks consistently fail to offer competitive deals for savers.

If your maturing bond holds a large lump sum, failing to switch to a higher rate could cost you a significant sum in lost interest. 

An analysis by Paragon Bank found that 261,000 savings accounts holding £10,000 or more were earning just 1% AER or less in July 2024. The bank calculates that £8.6bn is held in these accounts, with an average balance of £32,811. 

Based on 1% interest, the average account could expect to earn £328 in interest over a year. But if that balance was invested in an account paying 4% AER, interest income would increase to £1,312.