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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