A LITTLE-known savings account has seen its rates shoot up substantially in recent months and one is paying savers 3.55% back.
It comes as banks are battling it out to offer customers the best rate of returns.
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The Bank of England has consecutively raised the base rate ten times since December 2021 and savings rates have been creeping up.
Rising rates mean that savers can better take advantage of a number of different types of accounts – and more specifically notice accounts.
Andrew Hagger of Moneycomms.co.uk said: “As always, much of the focus tends to be on the interest rates paid on easy access products or fixed rate bonds, but there is an often overlooked third option that’s worth considering.”
“If savers are happy to give up a little flexibility on access, then they can earn a decent premium above the best easy access rates and still earn monthly interest if that’s what they desire.”
Investec’s 90-day notice account tops the best buy table and rewards savers with 3.55% interest if they deposit at least £5,000.
This is substantially higher than the rates in December 2021 when the best deal on 90-day notice account “paid a mere 0.95%,” according to Andrew.
Other banks have also upped their rates but it’sa important to remember that the exact amount of interest you’ll get will depend on the amount of cash you invest.
Stafford Railway Building Society’s 90-day saver comes with a 3.4% interest rate on deposits o £5,000 or more.
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For those with less cash to deposit, OakNorth Bank’s notice account pays 3.2% on savings of £1 or more.
Notice accounts form a halfway house between easy-access and fixed-rate bonds and their top rates sit between the two.
Unlike with easy-access savers, customers wishing to withdraw any of their cash will need to give notice over a specific time period before the money is paid out.
Some accounts can permit faster withdrawals but you’ll be charged a fee and may miss out on any interest gained so be aware of your account’s terms and conditions.
If you’d prefer the security of being able to withdraw your cash without fee at any time, an easy-access saver might be a safer bet – but you’ll forfeit slightly lower rates.
However, if you want to lock away your cash over a longer period and take advantage of even better rates a fixed bond saver is best.
Andrew said: “The best easy access savings rate is currently 3.11% and the best deal for a 1-year fix stands at 4.17%, so the pricing offers a decent ‘halfway house’ option for savers who don’t want to lose access to their cash for a full 12 months.
“The ideal cash savings portfolio should contain a mix of products to give the level of access needed at the best overall rate, so a combination of easy access, notice savings and fixed rate bonds is a great mix by which to achieve this.”
But notice accounts aeren’t the only savings accounts making a comeback in 2023.
We’ve explained why those earning more than £1,000 in interest each year should consider opening a cash ISA.
How can I find the best savings rates?
With your current rates in mind, don’t waste time looking at individual banking sites to compare rates – it’ll take you an eternity.
Research websites like MoneyFacts and price comparison websites such as Compare the Market, Go Compare and MoneySupermarket will help save you time and show you the best rates available.
These sites let you tailor your searches to an account type that suits you.
There are five main types of savings accounts, and understanding the differences can help you narrow down the options.
- Easy-access savings accounts – usually allow unlimited cash withdrawals. However, this perk means they tend to come with lower interest returns.
- Regular savings accounts – generate decent returns but only on the basis that you pay in a set amount each month.
- Notice accounts – offer slightly higher rates than easy-access accounts but you’ll need to give advance notice to your bank (up to 95 days) before you can make a withdrawal or you’ll forfeit the interest.
- Fixed rate bonds – these offer some of the highest interest rates. However, if interest rates increase during your term you can’t move your money and switch to a better account.
- Individual savings accounts (ISAs) – these can pay high interest but come with high withdrawal fees. But, Lifetime Isas are great for anyone aged 18-39 hoping to buy a house or save for retirement.
