The best notice savings accounts

by Simon Ward on 12 April 2013  |  1 comment
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You used to be able to earn a better rate if you locked your money away rather than putting it in an instant-access savings account. But is that still the case?

If you want to put some money away but don’t think you’ll need to access it in too much of a hurry, a notice savings account has always been a good option.

As the name implies, these accounts require you to give some notice before you withdraw your money or you’ll lose the interest you’ve built up.

In return, they historically offered better rates than instant-access savings accounts, although the rates aren't usually as good as you’ll find with fixed-rate bonds, which lock your money away for longer.

Sadly, in line with other savings products, interest rates on notice accounts have fallen sharply over the course of the past couple of years, particularly for 60-day and 90-day accounts.

That's partly because banks and building societies are generally lending less so don't need the same level of deposits as they did in the past. They are also able to borrow money at cheaper rates, thanks to programmes such as the Government's Funding For Lending scheme.

Let's have a look at the top accounts across the different notice periods and see how they compare to other types of savings accounts.

Top 30-day notice accounts

The best rate around is 2% - which you can also get in an instant-access account - and you'll need to watch out for the interest rate drop on these two when the bonus period ends. 

Top 60-day notice accounts

There a number of other accounts that only cater to savers in the local area, such as the Fifty Fifty from Loughborough BS, which may be worth a look. However, it’s worth noting that locking your money up for an extra 30 days may actually bag you a worse rate than with a 30-day notice account. 

Top 90-day notice accounts

Again, these rates offer little improvement on notice accounts with shorter notice periods.

Top longer-term notice accounts

Again, there’s not much benefit to locking your cash up for such a long term, with the top rate from Investec actually paying less than the leading 30-day notice account.

A word or two on interest rates

Is an ISA a better option?

If you don't have a huge pool of money to save and you're likely to need access to it at some point, you could put it in an easy access or short-term notice Cash ISA.

While these are better used for long-term savings, if you're not going to have any spare cash to top up your savings you'll probably earn a better interest rate. And of course you won't pay any tax on the interest. For the latest rates, take a look at The UK's best Cash ISAs. Just remember that once you've used some or all of your yearly allowance it's gone for good.

The Financial Services Compensation Scheme

Finally, just a reminder that all the above accounts are covered by the Financial Services Compensation Scheme (FSCS).  This guarantees your savings up to £85,000 per financial licence (if you want to see who owns who, read Who owns your bank or building society?) in the event it goes under.

More on savings

Compare savings accounts

The best instant access savings accounts

The top fixed rate savings bonds

The UK's best Cash ISAs

Top Cash ISAs for transfers

Top savings accounts for kids