Are you on the hunt for a great savings deal? If so, you'd be wise to sit up and take notice of Moneyfacts' latest finding: the average interest rate for notice savings accounts has hit a two-year high! They could certainly be worth considering…
The average rate for a notice account now stands at 0.91%, the highest seen in two years and a fantastic boost for the savings market. It may not sound like a lot, but it's a welcome increase from the 0.88% recorded at this point last year, and with inflation turning negative last month, even 0.91% will give you a measurable return!
It also follows on from the slight signs of improvement we witnessed in the savings market last month, and that's not all – the average for a notice account may be 0.91%, but the top rate available in our best buy charts stands at an impressive 1.86% AER! Isn't it time you got in on the action?
Notice accounts aren't always that popular among savers, and they tend to be overlooked in favour of accounts that are perceived as "simpler", such as fixed rate accounts (where you know how long you'll need to lock your money away for) or easy access accounts, which are thought of as more flexible.
However, although easy access accounts are often thought to be the favoured vehicle for savers' cash, many of these come with "disguised penalties in the form of restricted withdrawals", said Rachel Springall, finance expert at Moneyfacts. This means that, even though these accounts may sound simple enough, many savers could find that they're only allowed a few withdrawals per year – and if they exceed the limit, they could be faced with a hefty rate cut.
"Notice accounts are far more transparent, and customers will be told how to access their funds upfront," said Mrs Springall. "Almost all of these accounts are free of fancy bonuses, too. Over a quarter of the notice account market belongs to straightforward 30-day notice deals: the current market-leading account is offered by Charter Savings Bank with a rate of 1.40%, which is managed online and is free of a short-term bonus."
If you're willing to give a bit more notice, you could secure even better rates, too. Secure Trust Bank's 120-day notice account pays a rate of 1.85%, while Hampshire Trust Bank pays 1.60% to those who are willing to give 90 days' notice. Charter Savings Bank takes the top spot in the 60-day market too, with its internet-operated deal paying 1.55%.
The results also highlight another interesting point – that lesser-known banks are the driving force behind this sector of the market. "While the big banks and well-known brands shy away from this area of the market, the challenger banks have been making themselves known in the best buy tables," added Mrs Springall.
"It would be great to see more notice accounts with online access hitting the best buy tables as these are currently few and far between. Savings providers need to change people's perceptions of these accounts and boost competition by shaking up the market with top rates that also offer convenient online management."
So, is it time to consider notice accounts? By the looks of things, the answer is categorically yes! All it could take is a bit of careful management so you know when to plan your withdrawals, and then you can benefit from truly competitive rates.
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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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