United kingdom Daily news: Savers in fixed-rate bonds face earning just 0.008%

Rabu, 13 Juni 2012

Savers in fixed-rate bonds face earning just 0.008%

Savers in fixed-rate bonds face earning just 0.008%

By Sylvia Morris

PUBLISHED: 18:50 EST, 12 June 2012 | UPDATED: 05:47 EST, 13 June 2012

Throwing money away: Savers should tell their bank their plans for cash in fixed-rate bonds

Savers in fixed-rate bonds could find their money automatically trapped in a new bond without access if they fail to tell the bank or building society their plans for the cash.

Or they could find their money being pushed into an easy-access account earning as little as 0.008 per cent after tax (0.01 per cent before).

Since the Bank of England base rate fell to its historic low of 0.5 per cent over three years ago, savers have flooded into fixed-rate bonds.

There is Â£188billion tied up in fixed-rate deals and billions of pounds worth of bonds will come to the end of their term before the end of the year.

But savers need to watch out for what happens at the end of the term. With Barclays, you have just 14 days to get your money out if you donâ€™t tell the bank what you want to do with your money.

After that, you lose easy access and your money will be tied up for a further term.

With Halifax your bond is dumped into an easy-access account where it earns just 0.08 per cent (0.1 per cent). With BM Savings, Saga and AA Savings, all part of the Halifax, if you do nothing, your money will end up in an easy-access account also paying 0.08 per cent.

At Virgin Money and Northern Rock you are put into an easy-access account paying even less at 0.008 per cent (0.01 per cent).