Savers face 'fixed rate precipice'
Some 5.5 million fixed-rate investments worth £110 million will mature in 2010, according to HSBC.
The deadline for the 2009/2010 tax year may have passed, but this means you have a whole new ISA allowance for 2010/2011 to use. Check out our
ISAs channel.
Tuesday, 06, Jul 2010 01:47
Millions of Britons could see their deposits fall off a "savings precipice" this year as their fixed-rate products come to an end, HSBC has warned.
The bank said 5.5 million fixed deals worth £110 million are due to mature in 2010, with the largest monthly amount - 581,044 - set to end in July.
People who reinvest in similar products could see their returns drop sharply, as best buy interest rates have tumbled by up to three per cent since the start of the year.
As a result, HSBC said that the income on an average deposit of £24,782 in an 18-month fixed-rate deal has dropped by 46 per cent over the investment period.
It added that the 2.7 million savers who have already seen their fixed-rate investments mature in 2010 would have lost a combined £722 million in income if they simply reinvested their deposit in a like-for-like product.
HSBC head of pensions, savings and investments David Wells said this drop could be "an especially nasty shock" for people approaching retirement.
"We urge people to seek advice and consider all their options before simply reinvesting their savings in a similar product," he added.
Andrew Hagger of Moneynet.co.uk recently said that fixed-rate savers will continue to struggle to get decent returns until the Bank of England raises its base rate from 0.5 per cent.