Savings account Guides

A guide to notice savings accounts

Updated: Monday 19 March, 2012

By Martin Fagan

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

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

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
• And finally

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 than with an instant access savings account.

Notice accounts will only let you withdraw money after a set “notice period”; if you need to get your money out before that notice period ends, you’ll pay for the privilege. Typical notice periods are commonly thirty days, sixty days or ninety days, although some can be as short as seven days. 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, such as 90 days loss of interest.

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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 often other advantages to notice savings accounts, such as an annual bonus if you don’t make any withdrawals within a specified period.

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.

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How can I withdraw money from my account?

When choosing your account provider, the various options it offers to withdraw your money and monitor your account are factors you need to consider.

Most providers offer online services to enable you to make withdrawals or deposits over the internet. Some offer telephone banking, and for those providers with a branch network, cash withdrawals are easy. Just remember that 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, while other offers may only be available to new customers.
2. Opening balances - With some savings accounts there is a minimum amount you have to put in to open the account.
3. Conditional bonuses - Providers may offer account holders conditional bonuses if they make few or no withdrawals over a certain time period.
4. 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 that rate once the bonus term ends.
5. 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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And finally

If you know for sure that you won’t need the money you’re saving for the foreseeable future, 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. Compare the best savings rates, or work out how much interest you can earn with our savings calculator.

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