Money blog: Widespread issues with card payments reported – as people turned away from

For Savings Guide this week, Savings Champion research and development manager Daniel Darragh gives us the lowdown on the best notice accounts on the market right now… 

Notice accounts have seen a rally in recent times, with rates on the rise.

Some of these accounts are offering some of the highest rates outside of regular savings accounts. OakNorth’s 95-Day Base Rate Tracker, paying 5.37% AER, and Vanquis’s 90 and 60-Day accounts, paying 5.35% and 5.30% AER respectively, even beat any fixed-rate term accounts currently available.

A relatively unloved and often overlooked area of the savings market, notice accounts tend to offer higher rates than easy access accounts due to their restrictions on access, but they have greater flexibility of access than a fixed-term bond.

As the name suggests, notice accounts require you to give notice to access your money without a penalty. Usual notice periods range from 30 to 120 days, although there are some accounts on the market that require six months or even a year’s notice. 

While you need to give the required notice to access your cash on the majority of notice accounts, some will allow immediate access with a penalty equivalent to the notice period – although this is now less common. This penalty can be taken from the capital if insufficient interest has built up prior to access, so it’s important to plan carefully as you could end up with less money than you put in.

It’s also important to note that unlike fixed-rate bonds, notice accounts pay a variable rate of interest so are subject to fluctuations in rates over time. This is particularly pertinent given the speculation that the Bank of England is considering cutting interest rates in the coming months, which may well be passed onto savers in variable rate accounts by the underlying provider.

In the case of notice accounts, when rates decrease, the amount of notice given to customers varies from provider to provider. Some providers will give customers the full notice period, plus x number of days, before any rate reductions take effect – in essence, allowing clients to give notice and withdraw their funds from the account before the new, lower rate takes effect. 

Other providers may only give a set amount of days, less than the notice period itself, which means that, even if you were to give notice on the day you were informed of the rate drop, your money would be subject to the lower rate for at least part of the notice period. As there is no hard and fast rule on this, it is important to check the terms and conditions of the account so you know what situation you will be in if or when rates start to fall.

For some people, not being able to access their money immediately is important to help them to resist dipping into their savings and it could also be a good way of getting a higher return on money that you know you will not need straight away – so could be a serious consideration for many cash savers.