A quick guide to notice savings accounts
When you’re in the market for a cash savings account, being able to do a bit of forward planning can often secure you a better rate. If you can wait a little while to access your savings, a notice account could give you a little more interest than an easy access savings account, without having to lock your money away for a long period. With the Bank of England base rate currently at a record low, every little helps in a tough environment for savers, so notice savings accounts could be worth a second look.
What is a notice savings account?
They are a type of cash savings account which sits somewhere between an instant access savings account and a fixed-term savings bond.
With a notice account, you have to notify your provider in advance when you want to make a withdrawal.
The notice period might be of 30, 60 or 90 days or even longer, (government backed premium bonds have a notice period of 30 days).
You might get a better interest rate than on an easy access savings account, but this is not guaranteed so it’s worth checking the best-buy tables carefully.
Bear in mind that rates on notice accounts are variable. The terms and conditions of different accounts will vary – some will allow you to make additional deposits, and some will let you withdraw money without giving notice, but you may have to forfeit a portion of interest earned.
There may also be limits on the number of withdrawals you can make each year.
Pros and cons of notice savings accounts
The main advantage of a notice period is that it’s a compromise which could get you a slightly higher rate than you might get on an easy access account, without shutting your money away for years in a fixed-rate bond.
The main disadvantage of these accounts is that they are not very flexible: you will need to plan when to access your savings. If an emergency arises and you have to get your hands on your cash, you face the choice of waiting out the notice period or losing some of your interest. So, while they might be suitable for saving for a medium-term goal with a fixed end date, such as a holiday, wedding or Christmas, your day to day emergency fund is probably better in an easy access account. Some notice accounts can only be managed in branch or by post, which won’t suit everyone.
Of course, there is also the fact that providers will now be passing on the Bank of England’s latest rate cut to savers, so notice accounts may look less appealing. Anthony Morrow, CEO of digital financial advice service OpenMoney, said he is concerned about affect the cut to 0.1% - the lowest rate in the Bank’s history - will have on savers.
“We'd urge people to continue to think of the ways saving in cash can help them during this time, in particular the importance of being able to access your money without penalties, despite the unattractive rates available,” he said.
Where are the best notice savings account deals?
Here are some of the best-buy notice accounts available at the time of writing, but remember that deals change often so do your own research.
- ICICI Bank HiSave Notice Savings Account 95 days pays an AER of 1.6% variable but this will drop to 1.4% from 15 June. You can make top ups and there are no withdrawal limits. The minimum opening amount is just £1 and you can apply online.
- ICICI Bank HiSave also has a 45 day notice account which pays 1.4% AER variable but this will drop to 1.25% from 1 May.
- Aldermore’s 30 Day Notice Account pays 1.3% AER variable and can be opened and managed online with a £1,000 minimum.