There are many options when you’re looking to build up some savings.
You need to consider how much can you afford to save, the interest rate and whether you want instant access to your money.
One option is a notice savings account, which works differently than a traditional savings account.
What is a notice savings account?
With a notice savings account, you must notify the provider each time you want to withdraw money, and sometimes you have to tell them exactly how much you’d like to withdraw.
This is because you benefit from a higher interest rate than a standard easy or instant-access savings account.
Notice periods usually start at 30 days, but they can be 60, 90 or even 180 days, and some providers limit the number of withdrawals you can make in one year.
It's a good idea to read the terms and conditions carefully for any notice account to make sure it’s right for you.
How do notice savings accounts work?
Notice savings accounts work the same way as easy-access accounts, except when it comes to withdrawing money.
Here’s how it works:
Choose an account based on your preferences, such as interest rate and notice period.
Open your account and deposit your savings – there might be a minimum deposit.
When you’d like to make a withdrawal, contact your provider and notify them, telling them how you’d like to receive your money.
Once the notice period has passed, the money will usually be paid directly into your current account, but exact terms vary between providers.
If you need to withdraw money faster, this might be possible, but there will probably be a penalty charge, such as a temporary forfeiting of interest on your account.
What are the pros and cons of a notice account?
The main advantages of a notice savings account include:
A higher interest rate: By agreeing to put away your money and not withdraw it for a fixed term, you get offered better returns.
Discouraging impulse withdrawals: If you tend to make impulse purchases, a notice account can help you focus on budgeting, as losing better returns could make you think twice about unscheduled withdrawals.
Regular saving: Some fixed-rate accounts and bonds require one initial deposit. A notice savings account lets you keep depositing money as and when you want. This means you can grow your savings and take full advantage of the higher interest rate.
How do you choose the right notice savings account?
When you’re thinking about opening a notice savings account, there are some factors you should consider, which will differ between providers.
The notice period: First, make sure you know exactly how much notice you’ll have to give before you can withdraw your funds.
Interest rates: As you’ll want the best possible interest rate for your savings, compare different accounts.
Minimum initial deposit: Some accounts require a minimum amount to open your account. Make sure you’re comfortable with this and that it matches the sum you want to save.
Charges and fees: There isn’t normally a charge for opening a notice savings account but find out how much you’ll be charged for accessing your money early and look out for other restrictions, such as the number of withdrawals you can make each year.
Online access: This makes accessing and managing your account much easier, so make sure any account you’re considering provides it.
Notice accounts are worth considering if you’re after a decent interest rate, and you don’t mind waiting before you can access your funds.
It’s worth looking into savings accounts that offer a good interest rate and making sure it meets your needs.
It’s a good idea to speak to a financial adviser if you’re in any doubt about your savings strategy.
Learn more: Do I need a financial adviser?