Opinion: locking your money away for a short time makes no sense


Updated on 01 July 2025 | 0 Comments

Notice accounts and short-term fixed-rate deals offer limited flexibility and the rates can easily be beaten.

With inflation once again becoming a concern, savers are under pressure to ensure their cash is earning a decent rate of interest.

Fixed-rate savings have traditionally been the most generous homes for your money, paying a top rate in return for you promising not to access your money for the duration of the term.

This was especially true of the shortest fixed-rate bonds, which have terms of one year or less.

Similarly, notice accounts have generally offered more generous rates by requiring you to wait, usually two to three months, before accessing any of your funds.

But, in the current market, both short-term fixes and notice accounts can easily be beaten by easy access accounts, which of course also allow you to access your money whenever you want.

So locking your money away for the short term is not only less flexible, but will earn you less money as well.

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Fixed vs access: rate comparison

The best six-month fixed-rate savings rate you can get at present is 4.48%, from Oxbury Bank.

Looking at notice accounts, RCI Bank has the best rate of 4.6%, requiring 95 days’ notice to access your cash.

So how does this compare to access accounts?

At present, the best rate is 5% from Chase Bank on its Boosted Saver.

However, that account is only available to those who open a current account with the bank, which many people won’t want to do just to get access to a top savings account.

Looking elsewhere, Plum offers a slightly lower rate of 4.92% on its access Cash ISA, which is 0.32% higher than the best notice account and 0.42% better than the top six-month offer.

Obviously, ISAs have an annual deposit limit of £20,000, but this will still be high enough for most people’s savings (and if you have a spouse, they can open one as well, allowing you to save up to £40,000).

Atom Bank also offers an access account paying a rate of 4.75% for those looking to set larger sums aside. 

Variable rates look set to fall

One of the main drawbacks of easy access accounts is that the rates are variable and could be subject to fall.

That scenario is likely, given that the Base Rate is on a downward trajectory.

Indeed, many analysts believe we will see one or two reductions in 2025.

But the important thing to note here is that notice accounts are variable too, and will likely be subject to similar reductions.

And, while the rate on a fixed-rate deal is locked in, you’re still likely to be better off opening a variable account that pays over 4.9% today than a six-month fix promising less than 4.5% over the term.

‘Drip-feeding’ could boost your savings further

Clearly, there is an element of risk involved with gambling on a variable rate, but there’s no question that access savings rates are among the most generous on the market.

And you could actually boost your savings further still by combining them with the only other savings products that can actually beat them.

Regular savings accounts allow you to set aside small sums each month and come with incredibly generous rates of up to 7.1%.

By putting your lump sum in a top-paying access account or Cash ISA and then drip-feeding your savings into one - or even numerous - regular savings accounts, you could really boost your total interest earned.

This obviously requires a little more admin, so it all depends on how much effort you want to put in in order to earn a top rate on your savings.

Fixed-rates a safer bet long term

The point of this comment piece is to highlight how locking your money away for a matter of months, either in a notice account or the shortest term fixed-rate deals, makes little sense.

But that’s not to say that you shouldn’t look to fix your savings at all.

If you have money that you know you won’t want to spend for some time and you aren’t interested in risking it by investing, then fixed-rate savings certainly look far more appealing.

Market analysts believe the Base Rate could fall by 0.75% by the end of next year, and this would certainly result in a gradual decline in the rates offered on variable accounts.

However, you can currently lock your money away for between three and five years while earning a rate of between 4.4% and 4.47%.

In other words, you could guarantee a rate that’s similar to the best short-term fix on the market today, for a number of years, in a market where savings rates are likely to keep falling.

That will clearly appeal to those with longer-term saving goals.

Conversely, those who’d quite like to access their money in the near future would be better off opting for a top access account over any short-term fix or notice account currently available.

Manage all your savings accounts in one place with Raisin, the simple savings service

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