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Fixed-Rate Bond Maturing? 5 Things to Do Before It Rolls Over
When a fixed-rate bond ends, doing nothing can mean your savings drift into a low-paying account. Here are five things to check before the maturity date.
A fixed-rate bond is one of the simplest ways to save. You lock your money away for a set term, usually one to five years, and the rate stays the same until the end.
The end of the term is where many savers lose out. If you do nothing, your money may be moved into an account paying much less, or locked into a new fixed term you have not compared.
The weeks before your maturity date are the right time to act. These five checks help you decide what to do with your savings next.
1. Find your maturity notice and check the default option
Under FCA rules, your provider must write to you in good time before the fixed term ends. The notice has to explain what will happen if you give no instructions, and what options you have. If it is sent well in advance, you should also get a reminder in the final 14 days.
Read that letter or email carefully. Some providers move matured savings into an easy access account, often at a lower rate. Others may plan to roll your money into a new fixed term.
Note the deadline for giving instructions. If you miss it, your savings will follow the default option, which may not suit you.
2. Compare the renewal rate with the rest of the market
The rate your current provider offers for a new fixed term is not necessarily its best rate, or the best rate available. Loyalty rarely pays in savings.
Compare the renewal offer with fixed-rate bonds of the same length from other banks and building societies. Look at the AER, which makes rates comparable across accounts, and check whether interest is paid monthly, yearly or at the end.
Interest rates can change quickly when the Bank of England moves Bank Rate. If your maturity date falls near a rate decision, it is worth checking rates again shortly before you commit.
3. Decide how much access you need next
Before choosing a new account, think about when you might need the money. Your situation may have changed since you opened the bond.
If you could need the cash within a year, a fixed term may be too restrictive, as many bonds do not allow early withdrawals. An easy access or notice account gives more flexibility, usually in exchange for a lower or variable rate.
You do not have to keep everything in one place. Some savers split the balance, keeping an emergency fund in easy access and fixing the rest.
4. Check your FSCS limit once interest is added
Eligible deposits with a UK bank or building society are protected by the FSCS up to £120,000 per person, per authorised firm, for firms that fail on or after 1 December 2025.
If your bond pays all its interest at the end, your balance on maturity could be noticeably higher than what you put in. Add up everything you hold with the same banking licence, including any other savings and current accounts.
If the total goes above the limit, consider moving part of it to a different provider. Bear in mind that some brands share one banking licence, so they count as a single firm for FSCS purposes.
5. Plan for tax on the interest
Savings interest is taxed in the year it becomes available to you. On a bond that pays everything at maturity, all the interest can count towards that single tax year, even if it was earned over three or five years.
Most people can earn some interest tax-free under the Personal Savings Allowance: £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. Additional-rate taxpayers do not get an allowance.
From the 2027/28 tax year, the tax rates on savings interest above the allowance are due to rise by two percentage points. If your next fixed term ends after April 2027, a fixed-rate cash ISA may be worth comparing, within your ISA allowance.
Before the maturity date
A maturing bond is a good moment to review your savings, not just to roll them over. Read the provider's notice, compare rates, decide how much access you need, and check FSCS limits and tax before you give instructions.
If you are not ready to choose, ask your provider whether you can move the money to its easy access account temporarily. Just check the rate, so a short pause does not turn into months of low interest.
This article is for general information only and is not financial or tax advice. Rates, allowances and product terms change, so check the latest details before you decide.
Sources
Claudio Tuteri
· Senior Finance Editor
