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Fixed rate bond savers set for a big fall as savers face interest rate drops of up to 7.9 per cent according to moneysupermarket.com – meaning many people will have to look for alternative means of saving as soon as possible.

Just one year ago savers had their pick of one year fixed rate bond products offering around 7% AER, according to the website. But for those that invested in one of these deals a new reality awaits, with many rates dropping off significantly when the account reaches maturity. This means savers will have to look fast for a new home for their money, and there isn’t a better home than an offset mortgage.

Kevin Mountford, head of banking at moneysupermarket.com, says: “Until now some savers will have been somewhat sheltered from the low rate environment, with their cash locked away generating excellent returns. But these savers are about to come down with a bump; some will find the interest paid on their savings has dropped by as much as 7.9%.

“The golden rule for anyone coming to the end of their fixed rate bond deal is to pay attention to the rate they are getting, and switch to a new deal as soon as the interest rate drops off. If they allow their cash to languish in low interest paying accounts it could cost them hundreds of pounds in lost interest every year.”

If you are at a loss as to where to put your money now bonds are lacking lucrative rewards, you should consider offset. Because offset is a money-saving loan rather than a money-making investment, the low rate environment is beneficial rather than a hindrance.

So talk to an adviser about your investments and your debts. There are always ways of making your money go further, it just takes some sensible decisions and some good advice. Offset will save you money and it will offer you benefits month after month, regardless of the base rate.

SOURCE: Moneysupermarket.com, 08/06/09

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