Benefits and considerations of notice accounts

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Key takeaways
  • Competitive interest: Notice accounts typically pay a higher rate of interest than easy access savings accounts

  • Control spending: You need to give notice to withdraw your money, which may deter you from making unnecessary impulse purchases

  • Additional payments: Like fixed rate bonds, you can’t ‘top up’ notice accounts once they are open

What are the benefits of notice accounts?

One of the reasons notice accounts are so popular is that they combine the benefits of both an easy access savings account and a fixed rate bond. Often viewed as a hybrid option, they offer a degree of flexibility and pay a competitive interest rate.

Some of the main benefits of notice savings accounts include the following:

  • Competitive interest rates – as an incentive for giving up immediate access to your cash, notice savings accounts usually pay a higher interest rate than easy access savings accounts
  • Helps prevent impulse spending – a notice account may deter you from spending your money on a whim as you’ll need to wait if you want to make a withdrawal. This can be particularly useful if you have a tendency to make unnecessary impulse purchases and want to get your budgeting in order
  • Freedom to access your money – although notice accounts don’t give you instant access to your cash, they offer a little more flexibility than fixed rate bonds

While notice accounts have many benefits, whether they’re right for you will depend on your individual financial circumstances and savings goals, and you should consider these carefully when deciding which savings account to open.

Pros and cons of notice accounts

When determining whether or not a savings account is the right fit for you, it’s essential to weigh up the pros and cons before committing your funds. To help you do this, we’ve explored a few important pros and cons of notice accounts below.

Advantages of notice accounts

  • Notice accounts tend to pay higher interest rates than easy access accounts.
  • This type of account can prevent unnecessary spending due to the restrictive barrier the notice period puts in place.
  • Notice accounts are a great savings option for offsetting the spending you do in your current account.
  • You may benefit from any increases in the Bank of England base rate

Disadvantages of notice accounts

  • They require you to provide notice for withdrawing your money, and often charge penalties for withdrawals outside of that period, if they allow you to do it at all
  • A notice account might not be your first choice for a rainy day fund as you can’t get instant access to your cash in the event of an emergency.
  • Unlike some other savings accounts, the interest rate isn’t fixed, which means it could fall if the Bank of England base rate drops

What are the best notice accounts?

Generally speaking, the best notice accounts will be those that pay the most competitive interest rate and have a notice period that works for you. You can compare different notice accounts in the table at the top of this page.

How do I find the best notice account for me?

The best notice account for you will largely depend on your financial circumstances. To narrow down your search, there are some questions you can ask yourself to determine your criteria:

  • How long can you afford to wait between requesting and receiving access to your cash? If you’re looking to set aside an emergency fund to cover the cost of things like breakdowns and damages, you’ll need instant access to the cash, meaning this type of account is probably not the right one for you.
  • What are your savings goals? Do the terms and interest rates of this account help you meet them?
  • How flexible do you want your savings account to be? Are you okay with the potential that you might have to pay a penalty to withdraw early?
  • Does the deposit requirement meet your needs? Will it allow you to put away the desired amount, or is it too high (or low)?
  • Do you have any outstanding debt? If so, you might want to consider paying it off before you tie your money up.

Once you’ve established your ideal account, you can look for the closest match by using free online notice account comparison tables. All of the information you need will be in the account’s terms and conditions, and it’s essential to read them thoroughly.

How do I get the best interest rate on a notice account?

Typically, the more restrictions you’re able to comply with, the better the interest rate is likely to be. For example, notice accounts with a longer notice period typically offer more competitive rates of interest, but this isn’t always the case. To secure a notice account with the best rate, you’ll need to do some research and compare different providers.

Don’t forget that notice accounts pay a variable interest rate, which means it could fluctuate depending on market conditions. It’s also worth noting that some introductory offers, for example, a high interest rate, may expire after a short period and you could be moved onto a lower rate.

How to compare notice accounts

Once you’ve established that a notice savings account is the right option for you, you’ll need to compare a range of accounts to find the best one. One of the easiest ways to do this is to use a free online comparison tool like the one at the top of this page, which allows you to compare accounts from different providers in one place.

What should I consider when I compare notice accounts?

Before you compare notice accounts, you’ll first need to have a clear understanding of what you want to get out of your savings account. This will make it easier for you to compare notice accounts to find the best one for you.

For example, if flexibility is important to you, you’ll want to look out for accounts that have a short notice period (30 days tends to be the minimum) and don’t restrict the number of withdrawals you can make. However, if your primary aim is to maximise your return, you may want to prioritise notice savings accounts that pay the highest interest rate.

Whatever your financial goals, you’ll need to consider the following points when comparing notice accounts online:

  • The interest rate – bear in mind that there’s a difference between the AER and the gross interest rate, so make sure you compare like-for-like
  • The length of the notice period – the minimum notice period is usually about 30 days, while the maximum is typically around 120 days
  • Restrictions on withdrawals – some accounts limit the number of withdrawals you can make in any one year, if at all
  • The minimum and/or maximum deposit – many notice savings accounts require a minimum opening deposit and limit how much you can save
  • How interest is calculated – notice accounts that compound interest regularly can help you grow your savings faster
  • Fees and penalties – it’s worth checking what charges you’ll incur if you do have to make an emergency withdrawal, or if this is even possible
  • The terms and conditions – as with any type of savings account, it’s essential to read the T&Cs carefully to prevent unwelcome surprises later on

Compare notice accounts online or learn more about opening and managing a notice account here.

What are the alternatives to notice accounts?

Despite their benefits, notice savings accounts aren’t right for everyone. Here are two good alternatives to notice savings accounts.

Fixed rate bonds

Fixed rate bonds can be a good alternative to notice accounts, especially if you’re a long-term saver and have a lump-sum deposit that you don’t need to access for a while.

These types of accounts usually pay a higher interest rate but you’ll need to lock away your money for longer (typically one year, two years, three years, five years or six months). Much like notice accounts, the longer you agree to tie up your money, the better the interest rate is likely to be.

Fixed rate bonds may also be a suitable alternative if you want peace of mind that your interest rate won’t change. Unlike notice accounts, which have variable interest rates, the interest rate on a fixed rate bond stays the same for the whole of the term.

Easy access savings accounts

However, if you want the flexibility to withdraw your cash without being penalised, an easy access account may be right for you. Although the interest rate is likely to be lower than on a notice account or a fixed rate bond, you’ll be able to access your savings as and when you need to. This is especially important if you intend to use the cash to pay for unexpected financial emergencies such as urgent home appliance repairs/replacements or large vet bills.

Whatever type of savings account you choose, keeping your money safe and earning interest is never a bad decision.

Opening a savings account at Raisin UK

To quickly and easily open savings accounts with deposit protection, simply register for a Raisin UK Account and log in to apply. You’ll find a great range of notice accounts, fixed rate bonds and easy access savings accounts in our marketplace – and all with attractive interest rates.

It’s free to open a Raisin UK account and apply for savings accounts from our partner banks. Once you’ve been approved, all you need to do is transfer your deposit and watch your savings grow.