New innovation from Investec but how does it stack up?

Author: Anna Bowes
14th December 2018

Investec has this week launched a new innovative product to offer savers a notice account interest rate with the facility of easy access to some of the money in case it is needed.

Investec

Called the Notice Plus Account, it is intended to give savers the best of both worlds.

We know that over 80% of the savings market is currently sitting in easy access accounts – yet many savers will simply not need immediate access to some or all of the funds. But with many notice accounts paying better rates of interest than easy access accounts, savers are missing out.

And the good news is that some of the rates on this new account are particularly competitive, especially for those who’d prefer to open just one savings account, rather than two, in order to replicate the access that the account provides.

The rates on offer depend on the notice period you choose for the bulk of the savings and the amount you would like to have easy access to, which can be up to 20%. In addition, a loyalty rate of an extra 0.05% will be paid after 90 days if no notice is placed. See below for more detail about how you can earn the loyalty rate¹.

At the moment, some of the shorter notice rates are overshadowed by some competitive easy access accounts, which currently pay up to 1.50% AER. But the 95 day notice option is very interesting.

For example, if you were to choose the 95 day option, including 20% easy access, the standard rate  is 1.70% or 1.75% if you qualify for the loyalty rate.

Compare this to putting 20% of your cash with the best easy access account paying 1.50% and 80% with the best notice account (1.85%). On £50,000, you’d only earn £40 less gross over 12 months if you were to place a notice request – it’s even less of a loss if you didn’t. Yet you only need to open one account.

We know that many of our customers are looking for a more flexible way to hold their savings, so it’s encouraging that we’re seeing more and more innovation for savers, as providers look at ways to make savings accounts meet their requirements.

Some providers seem to have realised that it’s not just about the rate (although it has to be competitive) but actually savers want simplicity and flexibility from their savings as well.

How does it work?

  1. Choose a notice period option: 35, 65 or 95 days’ notice
  2. Choose the percentage of deposit to have immediate access to: 0%, 10% or 20%
  3. An additional loyalty rate is available if notice isn’t placed for 90 days ¹

¹ How the loyalty rate works

For the first 90 days after opening the account, the standard (non-loyalty) rate will apply. After 90 days, if notice has NOT been placed on the account, the loyalty rate will apply going forward until notice is given.

N.B. If the easy access facility is used, this will not affect the loyalty rate qualification – so the higher rate will still apply after 90 days on the remaining balance, even if easy access funds have been withdrawn.

Once notice has been given, the 90 day qualifying period will start again, so the standard rate will apply for the next 90 days, and then the loyalty rate will resume if no further notice has been placed.

In summary, after the initial 90 day qualifying period, any notice request triggers a loss of the loyalty rate for the next 90 days - but NOT use of the easy access facility.

Rates on offer

Notice Period Immediate Access Percentage Interest rate (without loyalty bonus) Interest rate (including loyalty bonus)¹
    AER AER
95 days 0% 1.80% 1.85%
  10% 1.75% 1.80%
  20% 1.70% 1.75%
       
65 days 0% 1.50% 1.55%
  10% 1.45% 1.50%
  20% 1.40% 1.45%
       
35 days 0% 1.40% 1.45%
  10% 1.35% 1.40%
  20% 1.30% 1.35%

 

How the immediate access withdrawal facility works

If you have chosen an immediate access percentage of 10% or 20%, you can withdraw up to this amount without giving notice – and this will not affect your eligibility for the loyalty rate.

Following an immediate access withdrawal, you cannot make another one for the number of days of your chosen notice period, even if you withdraw less than your chosen immediate access percentage. You will have to wait for the number of days of your chosen notice period to make another immediate access withdrawal – but that can be up to 10% or 20% (depending on the account chosen), of the new balance.

For example:

Deposit of £100,000 into 95 Day Notice with 20% access facility

For the first 90 days a rate of 1.70% is paid, thereafter the rate increases to 1.75%

Assume on day 60 an easy access withdrawal of £10,000 is made (you could withdraw up to £20,000 which is 20% of the balance, but if less than this is made, the remainder cannot be withdrawn within the next 95 days.).

After 95 days another easy access withdrawal of up to £18,000 can be made, which is 20% of the £90,000 new balance. After another 95 days  20% of the remaining balance can be withdrawn – etc etc.

As the easy access withdrawal doesn’t affect the loyalty rate, you will still be earning the higher rate of 1.75% gross/AER.

It makes sense to check how competitive each option is, so feel free to call one of our savings experts on 0800 011 9705.


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