Activity amongst notice accounts has ramped up in recent weeks, so perhaps it’s time to consider this often-overlooked area of the market.
Often overlooked but offering a compromise between tying your funds up for a fixed term and having easy access to your funds, notice accounts could be an interesting option to consider.
November has so far seen an increase in competition in the notice account market, with a couple of key players striving to dominate our best buy table.
First of all, Secure Trust Bank launched new versions of its full range of notice accounts, taking three out of five positions in our best buy table on the 8th November.
The provider then effectively had a week of prominence, until Gatehouse Bank stepped up to the mark, taking the prime positions in our table.
And that is the state of play at the moment – the top account on offer is Gatehouse Bank’s 120 day notice account, which pays 1.87% gross/AER, closely followed by the provider’s 95 day notice account, paying 1.85% gross/AER.
>> See our current top five selection
Gatehouse Bank may not be a name that is familiar to some savers but has been active in the savings market since 2015 – although it has recently changed its name to Gatehouse Bank from its previous brand, Milestone Savings.
>> Find out more about Gatehouse Bank
One of the reasons that this is an often-overlooked product type is that you will struggle to find a big high street brand offering a notice account - they simply do not complete in this area of the market. There is not one single notice account available from a high street bank and hasn’t been for some time.
So, this means you will need to consider using a lesser-known name if you are interested in a notice account, but it is worth remembering that they are subject to the same regulation and protection as the bigger brands.
All of the providers that feature in our best buy tables are part of the Financial Services Compensation Scheme (FSCS) or European equivalent, so if you stick the FSCS limit, your money is protected should the provider go out of business.
If you are not familiar with how notice accounts work, it may be worth taking you through the concept.
The accounts pay a variable rate of interest and to access your money, you must give the provider the relevant number of days’ notice. In other words, you need to carefully plan your withdrawals, as you will not get your money straight away.
Generally speaking, the more notice you have to give, the higher the rate on offer – although this does vary wildly between providers. Typical notice periods range from 30 to 120 days, however there are accounts available with notice periods of six months or even a whole year.
Some notice accounts do allow immediate access to some or all of your cash but there will normally be a penalty equivalent to the notice period instead. This may even mean that you end up with less money than you started with, if you withdraw the money before it’s been in the account for longer than the notice period.
The key reason to consider these accounts is that they can offer a halfway house between easy access accounts and the much more restrictive fixed rate bonds.
If we consider that the top easy access rate is currently 1.50% gross/AER and the top one year fixed rate bond is 2.05% gross/AER – the top notice rate of 1.87% is more than halfway between the two.
>> Take a look at the whole savings market with our independent best buy tables
Notice accounts could therefore form a valuable part of a balanced savings portfolio.
If you ensure that you have rainy day funds in easy access accounts and longer term money held in fixed rate bonds, notice accounts can be a good way of squeezing as much interest as possible on the funds that you don’t need immediately, but don’t want to tie up for longer periods.
If you need any further help with finding the accounts that are most suitable for your needs, please call us on 0800 011 9705 to speak to one of our expert savings specialists.
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