These types of accounts offer a good rate of interest in return for notice being given when a withdrawal is required. Providers can require any amount of notice from seven days up to and including 120 days. However, the most common notice period is 30 to 60 days notice to make a withdrawal penalty-free. Instant access to your savings can sometimes be given subject to an interest penalty on the account. This is normally the loss of interest for the period of notice, which was required to make a penalty-free withdrawal. For example, an account requires you to provide 60 days' notice before you make a withdrawal. You make an instant access withdrawal on the account; the penalty will most likely be 60 days' loss of interest on the amount withdrawn.
Pros of notice accounts:
- Rates are normally higher than Easy Access accounts.
- Rates are variable and will change to reflect the Bank of England base rate. If this increases the account rates are normally changed to reflect this within one month.
- Notice has to be given for withdrawals, which, for people trying to save stops them from dipping into the account.
Cons of notice accounts:
- Penalties are paid if immediate access to the money is needed. The usual penalty is the loss of interest on the amount withdrawn for the length of notice required on the individual account.