Savers with fixed-rate bonds to give them better returns on their money could end up losing cash due to confusing variations over what happens when the deals end.
- Fixed rate bonds often offer higher interest rates
- What happens when the term ends varies from bond to bond
- Calls for a clear system so savers don't lose out
The relatively high returns offered by fixed-rate bonds are even more attractive as people battle with high inflation and low interest rates, consumer website Moneyfacts says.
But while some providers will return customers' cash when the deal ends, others put the money into accounts from which savers may have to pay penalty charges to get their cash back.
Moneyfacts wants an industry standard to be created to address what happens when bonds comes to an end.
A typical fixed-rate bond has a current average rate of 3.03% for two years and 3.59% for five years. But without a clear system, it is essential that people remember what happens when a bond's term ends, the site's financial expert Sylvia Waycot warns.
She says: "Fixed-rate bonds are an attractive option for anyone willing to tie their money up for a set period of time and the operating rules for the life of the bond are very clear.
"However, what happens at the end of the term is less clear and would benefit from an industry standard.
"Until that happens, we are left to the mercy of a varied and confusing journey that could end in a loss of money."
Moneyfacts found wide variations in the timeframe for when a provider tells a customer their bond is about to end, with some doing it a month or two weeks in advance, and others not even specifying when they will do it.
If people ignore a letter saying the bond is about to end or they are away from home, they could find that their savings have been automatically re-invested by the provider.
"The purpose of the contact could be to find out where to put your money, or it could be to tell you where the provider has decided to put it," Waycot adds.
"This could be an unattractive back-of-the-cupboard account that pays virtually nothing, and it could stay there indefinitely unless you spring into action and move it to a better account."