What happens when a fixed-rate savings account matures

A fixed rate bond is a savings account that holds your money for a set term, usually between six months and five years, in return for an interest rate that does not change for the whole term¹. "Maturity" is simply the moment that term ends: the rate stops applying, the interest you have earned is paid, and the money becomes yours to move or reinvest. MoneyHelper describes these products as requiring you to tie up your money for that period, and the end of that period is the first point at which you get full control back¹.

What catches many people out is that maturity is not a passive event. If you say nothing, your provider will make a decision for you, and that decision varies widely: the money may drop into an instant access account, roll into a new fixed term, or be returned to the current account it came from². The Financial Conduct Authority requires firms to warn you before the term ends and explain your options³, so the notice you receive in the post or by email is the cue to act. This page explains what happens at each stage, what the rules require, and what your choices are.

What maturity means: the end of a term of six months to five years

A fixed rate bond runs for a fixed term agreed when you open it. MoneyHelper, the government-backed money guidance service, says these products usually require you to tie up your money for between six months and five years¹, and Family Building Society notes terms can sometimes be even longer⁸. Yorkshire Building Society describes the range as usually between 1 and 5 years⁹. Which? has described fixed term bonds as guaranteeing the same returns for a set period, usually between one and five years¹⁰.

The rate is fixed for the whole term and stops at maturity. Principality states plainly that its rates are fixed "for five years until the bond matures (when the account comes to an end)"¹¹, and the same wording applies to its one year and three year bonds¹². Cambridge Building Society says the interest rate on its five year bond "is fixed until the maturity date and will not go up or down during the fixed term"¹⁴. Nothing about the rate changes during the term; everything changes on the maturity date.

The maturity date itself is usually the anniversary of opening. Principality's bonds mature "on the anniversary of the account opening", whether the term is one year, two years, three years or five years¹², and its standard five year bond works the same way¹⁶. Skipton describes the end of the fixed term as "known as 'maturity'"¹⁷. So a bond opened on 3 March 2026 for a two year term matures on 3 March 2028, and that is the date your options open up.

Before maturity: your money stays locked away

Until the maturity date, the deal you signed up to holds. MoneyHelper notes that fixed rate bonds usually will not allow you to add further funds once you have made your initial deposit, that there can be big penalties for early withdrawal, and that in some cases you might not be allowed to access any of your money until the end of the term¹.

The no-top-ups rule is consistent across the market. NS&I states that once you have bought a Guaranteed Growth Bond, a Guaranteed Income Bond or a Green Savings Bond, "you can't add any more money to it"⁶. LHV Bank says the same of its 1 Year Fixed Rate Bond: you cannot add more money after it is opened, though you can open more bonds if you have additional funds²⁰. So if you have spare savings during the term, they need a separate home, and the guide to types of savings account sets out the alternatives.

Early access is restricted, and the penalties can be significant¹. The details vary by provider and product, and some bonds allow no access at all before maturity¹. If you think you may need the money before the term ends, read the guide to taking money out of a fixed rate bond early before you commit, and consider whether an easy access account or a notice account suits your circumstances better.

Your options when the fixed term ends

When the term ends, the choice is yours, and it generally falls into three routes. The Post Office's guide summarises them: withdraw your money and move it to another account, reinvest in another fixed rate bond, or allow it to roll over into a new bond if your provider offers this²¹.

NS&I frames the same decision for its Guaranteed Growth Bonds: you can automatically renew for another term of the same length, renew for a term of a different length, or cash it in²². Its Guaranteed Income Bonds work the same way²³. In practice, that means the three realistic paths are:

• Take the money out. The balance, plus your interest, is paid to you or moved to an account you choose. From there you can spend it, hold it in an easy access account, or move it elsewhere.
• Reinvest in a new fixed term. You choose a new bond, of the same length or a different length, and the money starts a new term at the rate on offer that day.
• Do nothing and let the default apply. The provider moves the money according to its own rules, covered in the next section.

Which path suits you depends on your circumstances: whether you need access to the money, whether you have used your ISA allowance, whether the interest is likely to breach your personal savings allowance, and how the rates on offer compare with what you had. The comparison of easy access vs fixed rate savings sets out the trade-offs. Nothing obliges you to stay with the same provider: maturity is the natural moment to switch savings accounts, because there is usually no charge for leaving at the end of a term.

If you give no instructions, your provider decides where the money goes

This is the part of maturity that most often costs people money, because the default is rarely the best home for your savings. What happens depends entirely on the provider's own terms.

Bank of Scotland states that if you have a Fixed Rate Bond and do not give an instruction, "we'll automatically change it to an Instant Access Savings Account on your maturity date"²⁴. Which?'s review of savings small print found the range of defaults: if you do not instruct the provider before maturity, funds are usually moved into a different account such as an instant access deal, transferred into a savings account of the same length, or paid back into the current account the money came from².

Skipton is an example of the second kind: at the end of the fixed term "the account will automatically transfer into a new 1 year fixed rate bond unless you tell us otherwise before maturity"¹⁷. That means your money is locked up again, at a rate you did not choose. At the other end of the range, Union Bank of India (UK)'s Premier Bond terms state that if no maturity instructions are received, "we will reinvest the maturity amount (Amount invested plus interest) for a similar tenure" at the interest rate applicable on the maturity date⁵.

Which? looked at the top ten one year fixed bonds in November 2023 and found that half of the providers transferred the money into a current account, which in most cases means the cash then earns little or nothing²⁵. The lesson is not that any one default is bad, but that they differ: the same silence produces three different outcomes at three different providers.

Notice and deadlines: acting before the term ends

The rules are on your side here. The FCA's Banking Conduct of Business sourcebook requires that "a firm should provide notice of the expiry of the fixed term to the banking customer on paper or in another durable medium in good time before the end of the fixed term, explaining the consequences of expiry and the options available for dealing with the balance"³. The same guidance appears in the wider BCOBS rules²⁶. Separately, the FCA's conduct rules require a firm to warn a client with a fixed cash value at the end of a term who has not instructed a transfer, within 28 days of the end of the fixed term, and at least annually thereafter for as long as the value remains in the product²⁷. So even if you miss the first notice, a further warning should follow.

How much notice you actually get varies by provider:

Deadlines for replying matter as much as the notice itself. NS&I asks for switching instructions to be received "no later than two working days before your fixed term investment matures"³³. Nationwide adds a safety net of sorts: if your bond matures into its maturity account and you do not use it, a further reminder arrives 30 days after your bond matures³². Check your own provider's notice for its deadline, and make sure your postal and email contact details are current, because a notice that never reaches you still starts the clock.

Interest, tax and payment when the bond matures

How interest is paid depends on the product. Some bonds pay interest monthly or annually during the term; others pay it all at the end. Moneybox states of its 1 Year Fixed Rate Bond that "interest is calculated daily and paid at the end of the fixed term"³⁴. NS&I's Guaranteed Income Bonds pay income monthly, while its Guaranteed Growth Bonds roll interest up and pay it at maturity²².

Tax is where maturity has a real effect. NS&I states it directly for its Guaranteed Growth Bonds: "Is the interest taxable? Yes, in the tax year your Bond matures"⁶. The same applies to its Green Savings Bonds¹⁹ and, in its key features document, to Guaranteed Growth Bonds generally: "Interest is taxable in the tax year that your Bond matures"³⁵. Charter Savings Bank spells out the mechanics: the interest earned becomes taxable in the tax year the bond matures, unless you have the interest paid away to your nominated account during the term, in which case it becomes taxable in the tax year it is paid away³⁶. HSBC's guidance is blunt: "The interest earned on fixed rate bonds is taxable"³⁷.

Taxable does not automatically mean taxed. MoneyHelper explains that interest on savings is paid gross, and you might have to pay tax on it only if it is above your Personal Savings Allowance¹. Which? makes the same point about cash bonds: most have a fixed term between six months and five years, and whether interest is taxed depends on your allowance³⁸. A bond that pays several years of interest in one lump at maturity can push you over the allowance in that year, which is worth bearing in mind when choosing between a bond that pays interest away and one that rolls it up. The guides to tax on savings interest and the personal savings allowance cover the detail.

Fixed rate ISAs behave differently. Coventry Building Society states that "your matured ISA savings will then stay tax-free as long as you keep them in an ISA"⁷. Which? has also reported on fixed rate cash ISAs paying interest on maturity³⁹. The tax treatment is therefore a genuine fork in the road at maturity: leave ISA money inside the ISA wrapper and it stays tax-free; withdraw it to an ordinary account and future interest counts towards your allowance.

Moving your money out after maturity

Withdrawing at maturity is the simplest route: the fixed rate has ended, so there is no early withdrawal penalty to worry about. The Post Office lists "withdraw your money and move it to another account" as the first option at maturity²¹. The balance plus interest is either paid to you or held in a maturity or instant access account until you move it.

Timing depends on the provider. NS&I needs your instruction no later than two working days before maturity if you want the switch handled on time³³. Where money has already landed in a maturity account, Nationwide sends a reminder 30 days after the bond matures if the account remains unused³², which suggests providers expect some lag between maturity and the customer acting. If you are moving a large balance, also read up on FSCS protection and on what happens to money above the FSCS limit, since a maturing bond can temporarily leave a large sum sitting in one place.

Once the money is out, it is ordinary cash. You can hold it in an easy access account, split it across accounts, pay it into a cash ISA, or use it. The guide to switching savings accounts explains the mechanics of moving money between providers.

Rolling over or reinvesting in a new fixed term

Reinvesting means starting a new fixed term with the maturing balance. NS&I's Guaranteed Growth Bond holders can automatically renew for another term of the same length, renew for a term of a different length, or cash in²², and Guaranteed Income Bond holders have the same three choices²³.

One protection worth knowing about: NS&I applies a renewal rate rule for same-length renewals. If you choose to renew your Bond for another term of the same length, "you'll receive the interest rate we quote in our letter, or the interest rate on offer on the date your Bond matures, whichever is the higher"²². Not every provider offers this, so check what your maturity letter promises before assuming the rollover rate is competitive.

The amount you can roll over is limited by the no-top-ups rule. NS&I says you can renew "up to the value of your maturing Bond"²²: the maturing balance, including interest, can go into the new term, but you cannot use renewal as a way to add extra savings to the existing bond, because no further deposits are allowed once a bond is bought⁶. LHV makes the same distinction: you cannot add money to a bond after opening, but you can open more bonds with additional funds²⁰. If you want to invest more than the maturing value, that is a new bond with its own terms and its own rate.

Rolling over without choosing is also possible, and it is the default at some providers: Skipton transfers maturing 1 year bonds into a new 1 year fixed rate bond unless told otherwise¹⁷, and Union Bank of India (UK) reinvests the maturity amount for a similar tenure if no instructions are received⁵. The difference between choosing to roll over and being rolled over is the rate: a chosen reinvestment is made with the current rates in front of you, while an automatic one applies whatever the provider's terms dictate.

If the account holder dies before or at maturity

Fixed term accounts are not frozen when the holder dies, and this is one point where the "locked away" rule bends. Bath Building Society states that "a Fixed Rate Bond can be closed in exceptional circumstances, which includes the death of the account owner", following completion of the administration required in the event of death⁴⁰. Which? reports the same position across the market: if your money is in a fixed term account that has not matured, "it can still be closed immediately, with interest paid up to the date of death"⁴¹.

The balance becomes part of the estate. NS&I's terms for its Direct Saver illustrate the general approach: if the account holder, or the last surviving holder of a joint account, dies, no more deposits can be accepted, the balance becomes part of the account holder's estate, and the account continues to earn interest⁴². Which? has also reported that more families risk paying inheritance tax on savings, which may be relevant where a large maturing balance forms part of an estate⁴¹.

In practice, the executor or administrator contacts the provider with proof of death, and the provider explains its own process for releasing the funds. The money can then be distributed according to the will or the rules of intestacy.

Where to get help

If your maturity notice never arrived, or the default your provider applied looks wrong, start with the provider: its complaints process is the first step, and the FCA's rules on maturity notices³ are the standard it should have met. If the provider does not resolve the complaint, the Financial Ombudsman Service can look at it, and the guide to consumer protection in UK financial services explains how that works.

For free, impartial guidance on what to do with maturing savings, MoneyHelper, the government-backed service, explains how cash savings bonds work and what to weigh up¹. If you are comparing where to put the money, the guides to fixed rate bonds, notice accounts and easy access accounts set out the options side by side, and the savings section covers everything from opening an account to how interest is calculated. If a maturing bond was bought from a firm you now suspect is fake, the guide to savings and fake bond scams explains what to do.