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Mind the no notice account trap

Mind the no notice account trap

Category: Savings

Updated: 19/04/2012
First Published: 19/04/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Savers with money invested in no notice accounts have been warned that they could unwittingly cause their interest rate to take a dive.

Instant access and no notice accounts are popular with savers who like to be able to get their hands on their money at a moment's notice.

However, research conducted by Moneyfacts.co.uk has found that many accounts do limit withdrawals – some quite severely.

Amongst the terms and conditions in the no notice market, some accounts only allow customers to make a certain number of withdrawals a year – ranging from one to 12 – with the average being four.

If customers go above their limit, customers face their funds attracting no interest for a month or more.

There are also accounts in the market that instantly drop the rate of interest for the rest of the term if a single withdrawal is made.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said that customers should be sure of the exact terms of their account to side step any of the penalties.

"There is a widely held misconception around no notice accounts," she added.

They're viewed as easy access, but in truth all no-notice means is that you can access your funds, subject to restrictions, without having to give notice. It does not always mean you have unlimited access to funds.

"Other things to watch out for include accounts that limit the withdrawals to specific days of the year - very hard to remember.

"There are others that include 'closing an account' as a withdrawal, which could end up in a costly penalty just for moving your money."

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 Any products featured may be withdrawn by their provider or changed at any time.