What are notice saver accounts: Pros & Cons

What is a notice saving account?

A notice saver account is a type of savings account that requires you to give a set notice period before you can access your money. Depending on your bank, you may be able to choose from different notice periods, such as 31, 60, or 90 days. For example, if you pick a 31-day notice period, you’ll need to tell the bank 31 days in advance before withdrawing funds.

Generally, the longer the notice period you choose, the higher the interest rate you’re likely to receive.

Effectively, a notice saver account sits between a standard savings account and a term deposit.

Notice saver accounts versus savings accounts

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Notice saver accounts versus term deposits

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Benefits of notice saver accounts:

• A benefit saver account lets you earn interest on your money while you’re not using it, without locking it away for a fixed period like a term deposit.
• You can access your money if you need it, but with a prior notice.
• You can potentially earn a higher interest on your everyday savings compared to a regular savings account.
• You can continue topping up your account every time you have small sums of spare cash, without waiting until you have a decent sum of cash to invest in a term deposit.
• Reduces the temptation to spend money. Your money is out of reach as it would be with a term deposit and you can’t spend it without notice.

Disadvantages of notice saver accounts

• It’s easy to become complacent and fail to check that the interest rate is competitive.
• The interest rate can change. Notice saver interest rates can go up or down whenever the bank chooses, whereas term deposit rates are fixed.
• Some high interest savings accounts may offer better rates provided you can meet the conditions for earning these bonus rates.
• If you end up leaving your money deposited for a number of years, you may find you could have earned interest at a higher fixed rate with a term deposit.

How to compare notice saver accounts

Here are some key features to consider when comparing notice saver accounts:

• Notice period: Check the required notice period (commonly 31, 60, or 90 days). Choose a period that matches how often you’ll need your savings. Usually, longer notice periods come with higher interest rates.
• Interest rate: Compare interest rates offered by different providers for the notice period you want. Keep in mind that most notice saving accounts come with variable rates, which can change over time.
• Minimum deposit & balance requirements: Some accounts need a minimum deposit or offer different rates depending on your balance. Check that you can meet these requirements before opening an account.
• Deposit flexibility: Check if you’re allowed to add more money whenever you want, and whether there are any conditions you need to meet.
• Fees and account conditions: Check for any ongoing fees and early withdrawal penalties.
• Linked account: Most notice saver accounts need to be connected to your regular bank account for easy transfers. Make sure your current account can be linked to the notice saver account you want.
• Interest calculation: Check how interest is calculated on a notice saver account and how often it’s paid. Daily calculation and frequent payments can be beneficial.

Are notice saver accounts worth it?

A notice saver account might suit you if you want a higher interest rate than the base rate on standard savings accounts and don’t mind waiting a few days to access your money. They can also help you avoid impulse spending, since your funds are not immediately accessible.

You can add more money to your account whenever you like, which is not possible with a term deposit. However, notice saver rates are generally variable. Unlike a term deposit that comes with a fixed rate, your returns with a notice saver account can change over time.

Consider your savings goals to determine whether a notice saver or another savings option, such as a term deposit, better suits your needs.