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Agreeing to lock up your cash can boost the interest rate on your savings significantly.
Our desire to be able to get at our cash in a hurry means we are missing out on billions of pounds. Research by Savings Champion has found that 82% of cash savings are now in easy-access accounts, which allow savers to withdraw their money at any time. Yet "rates are as low as 0.15% in these... moving just half of the funds to top-paying... notice accounts could earn savers billions more," says James Coney in The Sunday Times.
The amount of cash held in easy-access accounts has been on the rise for years now.It currently stands at £754bn, up from £450bn in April 2012, according to the Bank of England. Part of the problem is that the number of notice accounts (which require you to wait for a set period of time between asking for your cash and receiving it) available on the market has fallen sharply over that time. But it is worth hunting one down.
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The Investec Notice Plus Account gives customers the option of a 95-day notice period. For the first 90 days, the interest rate is 1.7%, and then 1.75% after that. And you can still access up to 20% of your cash without notice (you'll get a slightly higher rate if you drop this perk).
Charter Savings Bank also offers a 95-day notice account it pays out 1.81% on balances between £5,000 and £1m, but you can't access any cash without notice. It may not sound like a huge interest rate, but the average rate on an instant-access savings account is just 0.62%, according to Which consumer research. If you had £5,000 in that account, you would earn £31 interest over a year. Move your cash into the Charter Savings Bank 95-day notice account and your returns treble to £90.50. As Anna Bowes from Savings Champion points out, "if you don't need access to your money, you can squeeze out a much better deal that makes it worth moving".
This is especially true if you haven't moved your savings for a while. Banks and building societies constantly launch new accounts and withdraw old ones. "They then quietly reduce the once top-paying rates, in the hope savers won't notice," says Sylvia Morris in the Daily Mail.
As a result, your once "best-buy" savings account could now be paying you just 0.1% interest. This month Nationwide slashed the rate on its closed easy-access accounts, including its Flexclusive Online Saver from 0.6% to just 0.3%. Similarly, Virgin Money pays 1.16% on its Easy Access Saver Issue 32, but if your money is sitting in Issues 1 to 30, your rate has just been cut to 0.25%.
If you still want instant access to your cash, then move it to Marcus, which pays a table-topping 1.5% but before you do so, consider if you could put at least some of it in a notice account, to lock in a better rate on a portion of your hard-earned savings.
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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.
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