4 in 10 adults are climbing the savings ladder with multiple fixed-rate accounts

New research** from Investec Save reveals a rise in ‘savings laddering’ as four in 10 adults (42%) hold multiple fixed-rate accounts with different maturity dates, in order to maximise the return on their money while maintaining regular access to their funds.

Savings laddering is growing in popularity and refers to the practice of splitting deposits across a range of fixed-rate accounts so that they regularly mature, enabling savers to spend their funds when they need them or put money back into another account.

By dividing their total funds into multiple fixed-rate accounts with different maturity dates smart savers are able to lock in higher interest rates. This was the most popular reason for adopting the strategy, with almost three quarters (72%) of adults who spread their savings across multiple fixed-rate accounts saying they did so to pick up the best rates on offer at the time.

Other benefits of adopting the savings laddering strategy are the flexibility it offers (39%) and enabling savers to make the most of higher interest rates while protecting them from falling interest rates (38%).

The most common maturity length for savers who are adopting this new savings laddering strategy is a year, with nearly two out of three (65%) adults with multiple fixed-rate savings accounts saying they opted for holding multiple one-year fixed-rate accounts.

Fewer decide to have multiple fixed-rate accounts with longer terms - a fifth of this group (20%) have two-year accounts, 13% have 18-month accounts and 11% have three-year accounts.

The extent to which savers are adopting the strategy differs depending on their circumstances. Almost a quarter of adults who are savings laddering (23%) admit to holding two fixed-rate savings accounts with different maturity dates while over one in 10 (12%) hold three. One in 20 (5%) say they have four or five fixed-rate savings accounts with different maturity dates, and 3% say they have more than five.

Savvy savers also like the fact that by laddering their savings their money matures at different times, giving them a predictable income stream (32%) and it enables them to meet their savings goals and save for specific items at certain times – such as a house deposit (20%).

Savers who aren’t fully adopting the savings laddering strategy are still opening different types of accounts to best suit their needs. Around a third (31%) of adults hold one fixed-rate account and one easy-access account and one in six (16%) have both multiple easy-access savings accounts and multiple fixed-rate savings accounts.

Just under a quarter of adults (24%) say they only have an easy-access account, compared to just 4% who say they only have a fixed-rate account. Around one in 10 (11%) say they don’t have any sort of savings account.

David Hunt, Head of Savings, Investec, said: “By adopting a savings laddering strategy with your funds, whereby you split your savings into smaller pots and place these into multiple fixed-rate savings accounts all with different maturity dates, you benefit in many different ways. You ensure that you get the best interest rates on offer at the time but also maintain flexibility and regular access to your money when each pot matures.

“This is a clever strategy, particularly in a falling interest rate environment, where rates are unpredictable, but many don’t want to tie up their funds for too long should they need it."

Investec Save’s range of accounts can be opened online in minutes and are fully managed online with no hidden fees or charges.

They include its 1-Year Fixed Rate Cash ISA paying 4.12% AER which can be opened with a minimum of £1,000 enabling customers to earn tax-free interest on deposits fixed for one year. They can open multiple 1-Year Fixed Rate Cash ISAs within their UK ISA allowance. ISA transfers into Investec’s new Cash ISA from other providers will be available soon.

Its Fixed Rate Saver with 1-Year, 2-Year or 3-Year terms available, currently offers 4.15% AER*, 4.16% AER* and 4.16% AER*, respectively. The Fixed Rate Saver provides simplicity and security for savers. Interest is paid on maturity of the 1-Year term and annually on the 2-Year and 3-Year terms. No withdrawals are permitted until the end of the term in each case, and no further deposits can be made after the first seven days.

Its 90-Day Notice Saver, which currently offers 4.00% AER*, offers unlimited deposits with withdrawals subject to 90-days’ notice. This is ideal for those expenses that you can plan for, such as a holiday or wedding.

The Online Flexi Saver, which currently offers 4.00% AER*, is a simple and secure instant access savings account. Unlimited deposits and withdrawals are allowed. This makes the Online Flexi Saver perfect for unexpected expenses that might arise, such as car maintenance or a vet bill.