Managing a notice account

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Notice accounts usually have a minimum opening balance, which can vary significantly depending on the provider.

Many notice accounts require an opening deposit of £1,000 or more, with some requesting as much as £10,000. You should always read the terms and conditions carefully to ensure you’re choosing the best notice account for your needs.

Unlike fixed rate bonds, which only allow you to make one initial deposit, you can usually make additional payments into a notice account whenever you like. This means you can grow your savings over time and still benefit from a competitive interest rate. While additional deposits are allowed, you’ll need to be careful not to exceed the maximum balance (more on this below).

Meanwhile, other savings providers will require you to open your notice account with a lump sum, and you won’t be able to top your account up. This is why it’s important to check the details of a notice account before you open it.

There’s typically no set limit on how much you can save in a notice account as it varies from provider to provider. For example, some notice accounts have a maximum balance of £500,000, while others impose a limit of £10,000,000.

There is, however, a limit on the amount that you’re entitled to claim back in the event your financial institution fails. This amount is £85,000 per person, per institution, or £170,000 per joint account. If you’re looking to save more than £85,000, it might be a good idea to spread your money across accounts with different providers.

If you want to withdraw money from your notice account, you’ll need to give notice to your provider beforehand. Exactly how much notice you have to give depends on the account. For example, if you have a 90-day notice account you must give 90 days’ notice, and if you have a 30-day notice account, you must give 30 days’ notice. Once your notice period has expired, the funds will then be released to you.

Some providers will let you access your money without serving your full notice period, but you’ll normally have to pay a penalty. This will usually mean forfeiting any interest earned, which can wipe out the benefit of opting for a notice account. If there’s a chance you may need instant access to your cash, it might be worth considering an easy access savings account instead.

It’s also worth noting that some providers restrict the number of withdrawals you can make in one year, so do check the terms and conditions carefully to find the best notice account for your needs.

The interest you receive on a notice account forms part of your personal savings allowance (PSA). This means you don’t have to pay tax on the first £1,000 you earn in interest if you’re a basic rate taxpayer, or the first £500 if you’re a higher rate taxpayer. Additional rate taxpayers don’t receive a PSA, so they’ll need to pay tax on any interest earned.

If you do exceed your PSA, you’ll have to file a tax return declaring the amount you’ve earned, and subsequently make a tax payment.

There’s very little risk involved when you choose to put your money into a notice account. The largest risk factor to your money is the financial institution itself, or the bank that you open your account with, failing.

In the unlikely event that it does fail, most institutions are protected by the Financial Services Compensation Scheme (FSCS), which allows you to claim back your money, with a limit of £85,000 per person, per institution. Meanwhile, the European DGS protects deposits in European banks up to €100,000 (or the equivalent amount in a European country’s local currency).

If you want to deposit more than £85,000, it may be worth spreading the funds between notice accounts from different banking groups to maximise your protection.

There’s no limit on the number of notice accounts you can open. In fact, having multiple notice accounts with different notice periods can be useful if you want to work towards different savings goals. As mentioned above, you may also wish to open more than one notice account if you want to spread a large amount of money across different banking groups.

If you do have several notice accounts (or indeed any other types of savings accounts), you’ll just need to check that the interest accrued doesn’t push you over your personal savings allowance.

To quickly and easily apply for the best notice account for you with competitive interest rates from a range of UK partner banks, register for a Raisin UK Account. It’s completely free to apply and open an account, and once your notice account is open, it will accrue interest at a competitive variable rate.

You can find out how to apply by reading our guide to opening a notice account.