Notice savings accounts explained

What is a notice account?

 A notice account is a type of savings account. 

With a notice savings account, you deposit your money in the account, and you can usually add money in whenever you want. However, if you want to withdraw money from your savings, you’ll need to give notice to your provider.

The notice period you have to give will depend on the provider and the terms of the account, but could be anything from 30 to 120 days. Some notice accounts will also limit the number of times you can withdraw money per year.

Though access to your money isn’t as straightforward as with an easy access account, the benefit of a notice account is that you’ll likely get a higher interest rate.

Is a notice savings account right for you?

A notice savings account is a good option as it offers some of the flexibility of an easy access account, whilst also having higher interest rates.

However, a notice account is only right for you if it offers what you need from a savings account.

If you’re saving for a long term goal, for example a wedding or house deposit, then it might be worth considering a notice account. In these cases, you know you’ll need to access your money, but not for some time, and you’ll know when you need to give notice to get it in time.

IMPORTANT NOTE: It’s important to bear in mind that a notice savings account is likely not the best option for your emergency savings fund. 

If, for example, you had a roof leak and needed to dip into savings to get it repaired, you wouldn’t be able to access your money until the end of the notice period. So, it’s a good idea not to tie all your money up in notice accounts or fixed rate bonds, where your money is locked away, in case of an emergency. Remember, you can open as many savings accounts as you want.

How to find the best notice savings account?

If you’ve decided that you want to open a notice savings account, it’s important to find the best fit for you. 

As with any savings account, different providers and accounts come with different interest rates and restrictions. You’ll need to compare the options available to find the best fit for you, and your savings goals.

Here are four things to look out for when choosing the best notice savings account:

1. Minimum deposit

Some notice savings accounts will require that you have a minimum deposit to open the account. Depending on the provider, this could be as high as £1,000, so it’s important that you choose a provider with a minimum deposit amount that suits your financial situation.

You should also check if the notice account requires a minimum balance. Some notice savings accounts will only allow you to earn interest on your savings if you have a minimum amount in the account. This could be as high as £1,000, so it’s important to check this before opening an account.

2. Restricted withdrawals

With a notice account, you’ll need to notify the provider when you want to withdraw cash. However, different providers and accounts will have different terms.

Firstly, you’ll need to think about the notice period. Usually, the longer the notice period on an account is, the higher the interest rate will be. However, this means that if you need access to your money, you could be waiting quite a long time.

Usually, options will range from 30 day notice savings accounts all the way to 120 days. So, you need to work out how long you can afford to wait to access your money.

Then, you should check whether the account limits how many times you can withdraw money. Some notice savings accounts will only allow a set number of withdrawals per year, and if you exceed that, they may charge you or pay you less interest. 

3. Interest rate

As with all savings accounts, you’ll earn interest on the money you save. This is a percentage of the total money in the savings account that you earn over a period of time. So, the higher the interest rate, the greater the return you’ll make on your savings. 

Interest rates vary among providers, so it’s important to compare as many different rates as you can to find the best one. 

However, usually the more restrictive a savings account is, the better the interest rate is. So, you need to weigh up the terms of the account, versus the interest rate. 

4. Access

With some notice savings accounts, you can only access them through a branch or by post. So, if you’d prefer to manage your savings online, you should check whether you’ll be able to before committing to an account.

How do you give notice?

If you want to withdraw money from your notice savings account, you’ll need to let your provider know. You can do this either in writing, online or via the telephone, depending on the terms of your account.

You’ll need to tell them:

• Which account you want to withdraw from
• How much money you want to withdraw
• When you want to withdraw the money (a date after the notice period has ended)

It’s important to note that once the notice period has ended, you can only make one withdrawal for the amount (or less than the amount) you gave notice for. 

If you withdraw more money than you gave notice for, you will face penalty charges on the whole amount you withdrew, not just the extra.

How much notice do you need to give?

It will depend on the terms of your account. Usually, notice periods start at 30 days and go all the way up to 120 days.

Benefits of notice savings accounts

One of the most important benefits of a notice savings account is the interest rates. While still having some access to your money, you can get a better interest rate than with other types of savings accounts.

For example, with the Bath Building Society, you can get a 60 day notice account with a variable interest rate of 0.5%. Whereas, with the same provider, an Instant account (an easy access savings account) comes with a variable interest rate of 0.25%.

As well as competitive interest rates though, notice savings accounts are good if you find it difficult to save money. 

With a notice savings account, you can pay money in, but there are notice periods and limits on withdrawals. This is helpful if you find it difficult to set money aside to save, and see the appeal in such restrictions.

So, notice accounts are worth looking into if you have long term savings goals, such as saving for a house deposit. This is because you can plan when you’ll need to use your savings.

Negatives of notice savings accounts 

Before opening a notice savings account, you should think about whether you’ll need access to your money.

The main drawback of a notice account is that you’ll need to give notice before taking out money, and there may be limits to how often you can do this.

With most providers, if you withdraw money without giving notice, or more often than allowed, you’ll be charged penalties. This is usually in loss of interest. 

For example, if you open a 60 day notice account and take out money without notifying your provider 60 days before, typically you’ll lose 60 days worth of interest as a penalty.

Or, with some accounts, they won’t let you withdraw money at all, and you’ll be forced to close the account early to get your money, and this will also mean you face penalty charges.

So, it’s worth considering setting aside some of your money in an easy access savings account. This can act as your emergency fund if you need money quickly, for example a car repair or a new boiler. 

You can open as many savings accounts as you like, so it's sensible to keep some money back that you can access immediately in case of an emergency.

Is my money safe in a notice savings account?

Before opening any type of savings account, it’s important to check that the institution you’re using is covered by the Financial Services Protection Scheme (FSCS). 

This means that if the worst were to happen and your provider went bust, your money would be safe up to £85,000, or £170,000 for joint accounts. 

If you have more than £85,000 in savings, you can consider splitting your money up across different providers, as the protection is limited per institution. By doing this, you can protect all of your savings.

Alternatives to notice savings accounts

If you’re not sure whether a notice savings account is the right option for you, there are various other saving accounts available.

If you know you’ll need immediate access to your money, there are easy access savings accounts.

If you know you can lock your money away for a long period of time in exchange for a higher interest rate, there are fixed rate bonds.

If you haven’t got a large amount of money saved but want to start putting money away every month, there are regular savings accounts.

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