Want to get a better savings rate but still be able to access your cash? Pocket 2.1% with a 90-day notice account
Savers seeking to squeeze every last drop of interest from their nest eggs should consider the little-known notice account.
You can now earn 2.1 per cent with Investec’s deal, while OakNorth is paying 2.12 per cent.
A notice account is a halfway house between an easy-access and fixed-rate deal. The catch is that you must give your bank warning if you need to make a withdrawal. Typically, this is between 30 and 120 days.
Top rates: A notice account is a halfway house between an easy-access and fixed-rate deal
However, if you can be organised, you will earn nearly a fifth more than you would get with the best easy-access account at 1.8 per cent with Al Rayan Bank.
Fixed-rate deals still pay a lot more. Rates are edging up to 3 per cent, with a top one-year rate of 2.83 per cent from Charter Savings Bank.
But these accounts are more restrictive as you cannot typically get your hands on your cash until the end of the term.
James Blower, founder of The Savings Guru, says: ‘Notice accounts work well for those who want a better return on their savings but don’t want to be too far away from accessing them.’
Savers currently hold a huge £994billion in easy-access accounts. Notice accounts and fixed deals are not nearly as popular, with deposits of about £155billion. But with many big banks still paying pitiful rates despite base rate rises, it is worth shopping around.
The more notice you are willing to give, the higher the rate should be. But right now it’s not necessarily worth opting for a longer notice period as the top 120-day account pays only 2.15 per cent, compared with 2.1 per cent with Investec’s new 90-day deal.
The shortest-term accounts are far less generous. Rates stand at 1.45 per cent to 1.5 per cent on 30 days’ notice — no better than you can earn from an easy-access account.
However, the top-paying 90-day accounts from Investec and OakNorth are only available online. And there is a minimum £5,000 deposit at Investec. If you would rather manage your account through a branch or by post, building societies do offer the accounts but at lower rates.
Among the best is Kent Reliance at 1.4 per cent, on 60 days’ notice.
Smaller banks and building societies are covered by the Financial Services Compensation Scheme (FSCS) as usual. It protects deposits worth up to £85,000 — £170,000 on joint accounts — in the event of bank failure.
Before choosing a notice account, it’s sensible to make sure you have an emergency fund that can be easily accessed.