Interest rates on certain savings accounts quadruple – top 5

Consecutive Bank of England Base Rate rises have largely meant better news for savers, as high street banks and building societies have been boosting interest across their own products to compete for the top spots. Notice accounts act as a middle ground between easy access and fixed rate, and interest is nearly four times higher than last year, research shows.

A notice savings account allows people to withdraw money whenever they need to, but they have to give the bank an agreed amount of notice or they could face penalties.

Notice periods typically vary from seven days up to 180 days, and the interest rate will change depending on the account a person chooses.

Lucinda O’Brien, personal finance expert at Money.co.uk Savings said: “It’s worth adding that if you choose a higher notice period, that doesn’t necessarily mean the interest rate is higher, so it’s always worth comparing savings accounts to find the best deal.”

According to Ms O’Brien, interest rates also act in a similar way to an easy access account as they are normally variable and not fixed, so the rates could go higher or lower depending on the market.

READ MORE: Building Society launches new ‘top’ savings interest rate

But due to its notice period, this savings account works well to prevent impulsive purchases, as its terms and conditions can act as a buffer for hasty decisions.

Ms O’Brien said: “If you are thinking about a notice savings account, ask yourself what you’ll need the money for and when you’ll need to access it. This will then help you to find the best account. For example, if you are saving for a holiday in the summer you’ll know when the remaining balance will need to be paid.”

Ms O’Brien added: “The snag with notice savings accounts is that you might not be allowed to withdraw your money without abiding by the notice period or if you ignore the notice period you’ll face a hefty penalty.

“This means it’s not ideal for an emergency fund, and it’s more suited to a future savings goal. As with all savings accounts, it’s important to read the terms and conditions and understand what commitment is involved before you take the plunge.”

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Allica Banks’ 180-Day Notice and 95-Day Notice accounts also rank high on the list, offering AERs of 3.5 percent and 3.4 percent respectively.

Savers need to deposit a minimum of £10,000 to open the account and interest is calculated daily and applied annually.

For those who have slightly less to initially invest, OakNorth Bank’s 120-Day Notice account is offering an AER of 3.35 percent.

Savers can get started with as little as £1 and interest is calculated daily and paid on the first day of every subsequent month.