Notice savings accounts

Notice-based savings accounts only let you get access to your money after a specified period. They used to offer good rates in the past but are less competitive these days.

How notice savings accounts work

If you know that you definitely won't need your money straight away, then you might be able to get a better rate of interest in a notice savings account. With these, you have to give a certain amount of notice before withdrawing your money. Typical notice periods are thirty, sixty and ninety days, although some are as short as seven days. If you don't give sufficient notice, you're likely to pay a penalty equal to the interest payable during the notice period.

Steer clear of penalties

Some accounts do allow you a limited number of penalty-free withdrawals per year - perhaps two or three - but you usually have to keep a minimum amount in your account in order to take advantage of this facility. Others offer you an annual bonus if you make no withdrawals at all, although you might be allowed to withdraw the bonus payment without losing the following year's bonus.

In theory, giving up the right to get at your money quickly gives the bank or building society more flexibility, meaning that they can afford to give you a slightly better rate of interest. However, the rates aren't always as high as you'd expect, and the often-complicated restrictions can border on the silly!

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