Looking for a short term home for your savings? If you are then you've probably been looking at easy access accounts or maybe at a 1 year fixed rate bond.
But there is a third way. A way that you could earn more interest than on an easy access savings account, but without having to keep your money locked away for a year…
The humble notice account (where you have to serve a certain notice period before you can make a withdrawal) is seeing somewhat of a resurgence. At present the best notice account pays 3.35% - just 0.10% less than the top 1 year fixed rate bond, but 0.28% more than the best easy access account.
1 Year Fixed Rate Bond 21
Internet 60 Day Notice Issue 2
120 Day Notice Personal Savings Account Issue 2
Postal 60 Day Notice Issue 2
Internet Extra (Issue 7)
3.07% AER(at £20K)
Correct as at: 31.8.12
So the top notice savings accounts don't currently pay much less than the top 1 year fixed rate bond. But while the top notice rate is fractionally lower, you are able to access your money sooner than with a bond and make further additions to your savings.
Of course, it all depends on how much access you need to your money. If you're saving for a goal that will require you to get at your money quickly (buying a new car for instance) then an easy access account remains the best option - even if the rate isn't as attractive. However, for those savers who have been looking with dismay as the top fixed rate bond rates have decreased over the past couple of months, notice accounts may well have been increasing in appeal.
Notice savings accounts don't tend to have introductory bonuses, as is the case with the best easy access rates. That said, the notice rates are still variable - so have the potential to go down, particularly if the Bank of England base rate is cut. Here a 1 year fixed rate bond still has the distinct advantage of paying a guaranteed rate of interest over a set term.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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