‘Niche’ accounts could help some savers double their interest rates
Savers could typically more than double their interest rate if they are willing to give their provider some notice before making a withdrawal, analysis has found.
Across the cash savings market, the average easy access rate is now just 0.26%, according to Moneyfacts.co.uk.
But the average notice account on the market pays more than twice this – at 0.60%.
Notice accounts set out a timeframe for savers to inform their provider, if they want to access some money in their account.
Moneyfacts said the average return on notice accounts is the only type of cash savings account on its records that has not fallen to a record low rate – taking into account easy access deals, fixed bonds and similar Isa deals.
Rachel Springall, a finance expert at Moneyfacts.co.uk, said: "Savers may feel disheartened by the onslaught of rate cuts seen in the easy access market and could be looking for an alternative account to secure a better deal.
"Notice accounts are a more niche area of the savings market, but they can provide an attractive return compared to easy access accounts.
"Savers must give notice to access their money and this requirement enables providers to offer a higher return than on easy access accounts. In fact, over two-thirds of the notice account market will pay 0.50% or more, whereas only a quarter of the easy access market will do the same.
"If savers are thinking about opening a notice account, then speed is crucial to acquire the top rates. Indeed, the current top six notice account rates in the market pay 1.21% on average, but this is 0.29% less than a month ago, when they paid 1.50%, based on a £10,000 deposit.
"Clearly then, the notice account arena has not been immune to the rate cuts that have engulfed the savings market overall, which have been fuelled by the coronavirus pandemic and subsequent base rate cuts."
Ms Springall also suggested that savers who are unsure about giving notice to make withdrawals could compare the notice periods.
She said: "Some are for the short term and may suit those hesitant to lock their money away over the longer term."