Savings account Guides

A guide to notice savings accounts

By Becca Talbot becca.talbot@consumerchoices.co.uk

If you are lucky enough not to need access to your money straightaway, then a notice savings account could be the best account option for you.

This is our guide to getting the most out of an account.

Once you’ve digested this guide, compare notice savings accounts to find the account that would be the most beneficial for you..

Compare notice savings accounts

• Why choose a notice savings account?
• How can I benefit from a notice savings account?
• How can I withdraw money from my account?
• What to look for when choosing an account?
• In summary
• Our recommendations

Why choose a notice savings account?

Notice-based savings accounts only give you access to your money after a specified time period. If you don’t need your money straight away, then you might be able to get a better rate of interest with a notice savings account.

These accounts will only let you withdraw money after a ‘notice period’. Typical notice periods are thirty days (Alliance and Leicester's eSaver), sixty days or ninety days, although some can be as short as a week. It is worth shopping around for an account which best suits your needs, because if you don’t give sufficient notice before making a withdrawal, you’re likely to face a penalty payment.

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How can I benefit from a notice savings account?

The main benefit of a notice savings account is the interest rate the provider offers. The account will usually pay slightly higher rates than other savings accounts to compensate for the inconvenience of having to give notice to withdraw money – logically, the longer the notification period, the higher the interest rate.

There are other advantages to notice savings accounts, such as an annual bonus if you don’t make any withdrawals.

Bonuses and high interest rates are appealing, but ultimately, if you’re going to add money to your notice savings account, you should only add what you know you’re not going to need in the short term future.

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How can I withdraw money from my account?

When choosing your account provider, the way you can withdraw money and monitor your account is a factor you need to consider.

Most providers offer online services to make withdrawals or deposits over the internet. Some offer telephone banking, and for those with branches, such as Abbey National, cash withdrawals are easy. Just remember the notice period…

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What to look out for when choosing an account?

There are several things you need to be aware of before choosing to open an account:

1. Opening restrictions – Some providers may only allow existing customers or local residents to open an account.
2. Opening balances – With some savings accounts there is a minimum amount you have to put in to open the account.
3. Withdrawals – Some savings accounts include conditional bonuses in their rates of interest. If the number of withdrawals made over a certain period of time exceeds the providers limit, you may lose interest.
4. Conditional bonuses – Providers may offer account holders conditional bonuses if they don’t make any withdrawals over a certain time period.
5. Unconditional bonuses - Some accounts have a bonus rate of interest until a certain time. These savings accounts appear to offer an attractive return, but this can reduce considerably once the bonus rate ends. If you choose a savings account with a bonus rate it is worthwhile reviewing the rate once the bonus term ends.
6. Guaranteed interest rates – Some providers may offer a guaranteed interest rate, despite being a variable rate account. These often relate to the Bank of England base rate, and may have the same effect as a bonus.

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In summary

If you know for sure that you won’t need the money you’re saving for a while, putting it in a notice savings account could benefit you in a big way. By allowing your bank or building society more flexibility with your money, they can afford to give you a slightly better rate of interest. The rates aren’t always as high as can be expected though, and restrictions can be complicated, so make sure you shop around for the best account for you.

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Our recommendations

Capital One (www.capitalonesavings.co.uk) offer a fixed rate bond with 6.30% AER, the starting balance minimum is £1000, and like the others account access is only available online.

Compare the best savings rates, or work out how much interest you can earn with our savings calculator.

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