Savers, beware of plummeting returns

As a saver, tying up your cash into high-paying fixed rate bonds is good in practice, as rates tend to be more competitive than those on easy access accounts.

However, if you fail to move your cash when the deal expires, you could lose out on more than £500, according to MoneySupermarket research.

For example, if you saved £15,000 into a one-year fixed rate bond with Cheshire Building Society in October 2011 (which paid an Annual Equivalent Rate (AER) of 3.51%), the total interest earned would be £526.50. But once this bond matures, there is no further interest applicable at all, meaning your savings start to earn nothing.

However, they could be earning a competitive rate of 3.33% with the State Bank of India or 3.30% with Close Brothers - some of the top-paying rates on one-year accounts currently available. So, as a saver it is vital that you don't ignore the end date of your fixed rate bond and take action instead.

When your fixed rate bond matures, the 'landing rate' will also vary from one provider to the next. The government's NS&I, for example, offers a poor rate on certain fixed accounts when they mature (see below), while other fixed savings providers are more competitive.

The key is to do your research to see what other rates are available so you can lock your money away into a new bond paying a competitive rate of interest.

The savings precipice

Crucially, when looking for a new account, you need to scour the market carefully. Separate findings from HSBC warn of a 'savings precipice' when savers come to reinvest, as rates for long-term products continue to fall.

While more than 4.9million fixed-rate products worth almost £94billion are set to mature in 2012, the recent analysis by the bank shows that those who had invested in the 2.3million fixed rate products that had matured by halfway through 2012, were at risk of losing £124million in income if they simply invested their nest egg into similar products.

Much of the loss of income is a result of longer-term products, with shorter-term bonds generally offering increased returns. HSBC found that those who put their money into one-year and 18-month bonds would see a slight rise in returns by reinvesting in the best buy products currently available.

However, those who lock their money away for longer are likely to see the largest decline in returns, with four-year products showing the largest fall in investment.

The advice to those who have money slotted away in fixed rate products due to mature over the rest of 2012 - and particularly four and five-year bonds - is to think carefully about the best place to put your money to ensure you find the best rate you can.

You also need to think carefully about how long you want to fix for, as if you lock your money away for too long, you risk missing out when rates do eventually go up.

What about NS&I?

As a saver, you may be tempted to opt for the security of Index-Linked Savings Certificates with National Savings & Investments (NS&I), as these are government-backed. These certificates have proved very popular with savers, as they guarantee your savings will keep their value by linking your return to the retail prices index (RPI).

However, you need to be aware that with these accounts, the rate plummets particularly heavily when a fixed rate deal comes to an end. For example, hundreds of thousands of savers who invested in Index-Linked Certificates several years ago are now earning just 0.09% on their savings; this applies to those who had cash held certificates that matured before October 8, 2001.

So, unless you move your money elsewhere, you could find your hard-earned cash is held in a low-paying account which fails to beat inflation.

Further, it emerged last month that from September 20, NS&I is also going to charge exit penalties on some accounts for customers wanting to withdraw their cash early, including NS&I Index-Linked Certificates and Fixed-Interest Certificates - as well as children's bonds.

So, while the security of these accounts may seem appealing, you still need to see what else is on offer right across the market. (It's also worth bearing in mind that under the Financial Services Compensation Scheme (FSCS), each individual is covered for the first £85,000 of savings held per banking institution.)

Some providers will offer better landing rates when a fixed-rate bond matures however, so while it might seem like a long way off, it's important to check this at the point of investing - and of course, whether the rate is guaranteed or whether it could change.

What's out there?

The good news is there are now around 80 fixed rate bonds that beat inflation, according to MoneySupermarket. Here we round up some of the best fixed rate bonds currently on the market that you can move your money to next.

Short-term fixed rate bonds

If your one-year fixed-rate bond is about to mature, you may be keen to lock your money away into another one-year deal.

The State Bank of India is currently paying 3.33% on its one-year Fixed Deposit Offer, while Close Brothers is paying 3.40% on its Select Gold Fixed Account; both rates are paid on a minimum of £10,000.

For those with a lower minimum investment, the Post Office is currently paying 3.25% on its Growth Bond Issue 18 (one-year fix) on a minimum of £500.

If you're happy to lock your money away for two years, and have a tidy sum, Close Brothers is paying 3.75% on its Premium Gold account on a minimum of £10,000, while UBL is paying 3.50% on its Two-Year Fixed Deposit account on a lower minimum of £2,000.

Elsewhere, the Post Office is paying a slightly higher rate of 3.51% on its Growth Bond Issue 18 (two-year fix) on an even lower minimum of £500.

Medium-term fixed-rate bonds

If you're looking to slot money away for the medium term, you may want to consider a three-year fixed-rate bond.

The State Bank of India is top of the tables once again with a rate of 3.85% on another Hi-Return Fixed Deposit bond; the minimum investment is £1,000.

Elsewhere, UBL is paying 3.60% on its Three-Year Fixed Deposit accoun on a minimum of £2,000, but it's worth noting that if you have at least £10,000 to lock away, this can be beaten by the two-year fix from Close Brothers (see above) paying 3.75%.

Long-term fixed-rate bonds

When it comes to finding a new home for the money you're holding in a maturing fixed rate bond you will find the highest rates on offer are paid on the bonds that require you to lock your money away for the longest period.

If you're happy to lock your money away for five years, the State Bank of India is paying 4.50% on its Hi-Return Fixed Deposit bond.

The State Bank of India also has a very competitive four-year bond, another Hi-Return Fixed Deposit, offering 4.20%; both rates are paid on a minimum of £1,000.

Julian Hodge Bank is paying the just slightly lower rate of 4.00% on its five-year Capital Millennium Bond. It is also paying 3.75% on its four-year Capital Millennium Bond; both rates are paid on a minimum of £1,000.

Consider splitting funds

If you are in doubt about the best home for your money right now, you may find it useful to split funds between a "best buy" fix and a "best buy" easy access account, as that way you get the best of both worlds.