Notice savings accounts
Notice savings accounts can offer a balance between flexibility and higher interest rates. Looking to earn a better rate of interest but don’t want to lock your money away for years? A notice savings account might be what you’re looking for.
As the name suggests, you have to give notice to take money out, but you might earn more on your savings than with an easy access account. Here’s how they work.
Notice savings accounts can offer a balance between flexibility and higher interest rates. Looking to earn a better rate of interest but don’t want to lock your money away for years? A notice savings account might be what you’re looking for.
As the name suggests, you have to give notice to take money out, but you might earn more on your savings than with an easy access account. Here’s how they work.
What is a notice savings account?
A notice account is a type of savings account where you must notify your bank before you can withdraw your money. Here are some key need-to-knows:
- It’s the middle ground between an easy access and fixed-rate savings account.
- The most common notice periods range from 30 to 90 days, depending on the provider, but can go up to 180 days.
- The benefit of a notice savings account is that it typically offers a higher interest rate compared to easy access accounts.
If you’re able to lock away your money for a while, then this type of account could offer better returns (but not always, so check).
Why choose a notice savings account?
Notice savings accounts could offer you a balance between earning a higher interest rate and having some access to your money, if needed. They’re helpful if:
- You’re saving for a specific goal, such as a wedding or home deposit, and you don’t need immediate access to your money.
- You want to limit spending, as this type of account means you must plan withdrawals in advance.
How do notice accounts work?
Once you’ve found the right notice account for you, you can deposit your savings like any other account. But if you need to make a withdrawal, you need to let your savings provider know in advance. Once the notice period is over, you’ll be able to access your funds.
A few more important things to keep in mind about how notice accounts work:
- Generally, during the notice period, your money will continue to earn interest.
- If you need to withdraw money before the notice ends, then you may receive a penalty or lose interest.
- Some accounts have limits on how many withdrawals you can make annually.
Be sure to explore your options to find the right notice account for you.
Pros and cons of notice savings accounts
Think about these advantages and disadvantages before you choose a notice savings account:
Pros
- Higher interest rates – typically offer better interest rates compared to easy access accounts.
- Encourages saving – the notice period can help prevent impulsive withdrawals.
- More flexible access – you can still access your money if you need it, which makes it more flexible than fixed-rate accounts.
- Ongoing deposits – most notice accounts allow you to keep adding deposits to your account, which is not always possible on a fixed rate account.
Cons
- No instant access – you’ll need to plan ahead to withdraw your money, so this type of account isn’t the best place to keep an emergency fund.
- Variable rates – variable rates go up or down over time, potentially reducing how much interest you earn.
- Penalties – withdrawing without notice can result in penalties or loss of interest.
- Limited withdrawals – some accounts restrict the number of withdrawals you can make in a year.
- Minimum balance – some accounts may need a minimum balance. Be sure to check this and any other terms before opening an account.
Is a notice savings account right for me?
Notice savings accounts are best suited for people who:
- Have a specific savings goal – you might be saving for a particular reason, such as a wedding or holiday. A notice savings account can help you earn a higher interest rate while still offering some level of access, if needed.
- Can plan their withdrawals – if you can anticipate when you'll need to access your savings and plan accordingly, a notice savings account can be a good fit. But if you think you could need immediate access to your money, an easy access account would be more appropriate.
- Have enough savings to cover emergencies – before opening a notice savings account, it’s often recommended to weigh up if you have enough accessible savings to cover at least three months of outgoings. If not, you might not get the most benefit from this type of account.
If you do have to make an emergency withdrawal from a notice account, you’ll usually lose some interest on your savings.
How to pick the best notice saving account for you
If you’ve decided you want to open a notice savings account, how do you decide upon the best one for you? Here are a few things to think about:
- Compare interest rates – look out for accounts offering competitive rates and don’t assume that a longer notice period will automatically give you higher returns.
- Check for bonus offers – some providers offer introductory bonus rates for a limited period to entice you in. Before deciding, make sure you know what the rate will be once the introductory offer ends.
- Minimum initial deposit – some notice accounts can be opened with as little as £1. Others will need a minimum deposit of at least £1,000 to qualify.
- Penalties and fees – make sure you’re aware of any restrictions around early access, withdrawal limits or any other additional fees.
- Managing the account - not all notice accounts can be managed online, so make sure you’re happy with how you'll manage the account before you sign up.
Compare savings accounts
In theory, notice accounts offer higher interest rates than easy access accounts, but this isn’t always the case. Before opening a notice account, it’s worth comparing the rates available for other types of account first. You might find that a different type of account gives you better returns and won’t need any notice at all.
Notice accounts usually have variable interest rates. This means the interest rate can change over time. If you find you’re no longer getting a competitive deal, shop around to see if you can get a better rate somewhere else.
Frequently asked questions
How do you give notice?
You can do it online, over the phone or in writing, but it varies between providers. You’ll need to tell your savings provider the:
- Number of the account you want to withdraw from
- Amount you want to withdraw.
You can only make one withdrawal each time you give notice, even if you take out less than you’d specified. You’ll get a penalty if you take out more.
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