If you know you may need access to your savings and don’t want to tie your money up for a year or more in a fixed-rate account, an easy-access account would typically be the best bet.
However, notice accounts can be a great way to make a little extra on your savings without locking your money away for a prolonged period of a year or more.
The way that they work is simple. You deposit your cash with a bank, but rather than being able to access it or transfer it to another account at any time – as is the case with an easy-access account, or it being locked away for a fixed period, such as a one- or two-year bond – you can access your funds if you give the bank enough notice.
This might be useful if you plan to make a big purchase, such as a car, within the next year, but still want to get the best rate on your savings in the meantime. In general, the longer notice period you agree to give, the higher the rate of interest you’ll earn. However, to get the highest rates could require a notice period of six months.
The Secure Trust Bank 180 Day Notice Account has the highest rate on the market, paying 1.66% to savers. However, it requires 180 days’ notice of withdrawals, meaning it’s not suitable for savers who think they may need their cash quicker. Accounts must be opened online.
The rate is higher than the 1.32% offered by the top easy-access account, the AA Savings Easy Saver (Issue 6). In the first year, a saver with £5,000 saved in the Secure Trust Bank 180 Day Notice Account would earn £83 compared with £65 with the AA Savings Easy Saver account. The AA account must be opened online or by phone, and the rate plummets to 0.2% after a year.
For shorter notice periods, Secure Trust Bank provides the best accounts on the market, with the Secure Trust Bank 120 Day Notice Account offering a headline rate of 1.56% to savers.
Coming top for a three-month timeframe, the Secure Trust Bank 90 Day Notice Account pays 1.46% to savers – also more than the best easy-access saver. Both of these accounts must be opened online.
Tax-free alternatives
With Cash Isas, you can earn more if you’re willing to give your provider warning of withdrawals, but there is less of a gap between the top easy-access and notice accounts.
My Moneywise Best Buy is the Mansfield Building Society 60 Day Notice Cash Isa (Issue 2), which pays 1.25% to savers who give 60 days’ notice of withdrawals.
This account must be opened by post or in one of the Mansfield’s branches across the East Midlands. A £5,000 deposit here would earn £62.50 over the course of a year.
The AA Savings Easy Access Isa (Issue 14) is the top easy-access pick. This pays 1.16% but includes a 0.96% bonus for the first 12 months. This account can be opened online or by phone, and would earn £58 over a year.
So, if you’re happy giving your bank a heads-up before you make a withdrawal, notice accounts offer a good alternative to locking your cash away for years.
FEATURED PRODUCT: Atom Bank One Year Fixed Saver
If you are happy to lock your cash away for a year, Atom Bank has leapt to the top of the Best Buy tables with its One Year Fixed Saver. This pays a market-leading 1.8% to savers with a balance of £50 or more, but your money cannot be accessed for at least 12 months. You must open and manage the account using Atom Bank’s mobile and smartphone apps, and savings of up to £85,000 are protected by the Financial Services Compensation Scheme.
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