Super Accounts For Sensible Savers

Notice savings accounts are a lot better than we thought. But which one should you choose?

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We're not normally too keen on notice savings accounts here at The Fool. I wouldn't go as far as putting them in the `bad' category of financial products, or even the `ugly'. But the trouble is I don't think the rates are generous enough to reward locking your cash away for weeks or even months.

I wondered if the credit crunch has changed things.

Well, many notice accounts still offer a rather disappointing return, but one account has caught my eye. It pays an excellent 6.55% AER and -- this is the good bit -- you only need to give seven days notice to take your money out.

The account I'm talking about is Anglo Irish Bank 7 Day Notice Issue 2. If you're not the type to dip into your savings on a whim, I think this could be the perfect account for you.

What's so great about it?

Not only does it pay 6.55%, it's guaranteed to at least equal the base rate until 1 January 2011. Even better, you only need £1 to get started whereas the market-leading instant access account -- Kaupthing Edge Savings -- requires a higher minimum deposit of £100.

You might think that the Kaupthing account wins out as it's instant access and also pays 6.55%. But I think a 7 day notice account is attractive if you want to avoid impulse spending. The temptation to fritter may be easier to resist, but waiting just a week for your money still gives a reasonable amount of access when you need it.

What about safety?

With all the turmoil in the financial markets, particularly in the last couple of weeks, I know the safety of deposits is very important savers right now.

Fortunately, savings held with Anglo Irish Bank are covered by the Irish Deposit Protection scheme. The scheme rules have just changed to increase protection up to a maximum of _100,000 (about £79,000) for single account holders (or _200,000 for joint accounts holders). This upgrade provides five times more protection than the original compensation limit of just _20,000.

Now the Irish Deposit Protection Scheme is superior to the UK's own Financial Services Compensation Scheme (FSCS) where the maximum compensation limit for savings is capped at £35,000 (or £70,000 for joint account holders).

If you would like to know more about the compensation available for savers with deposits held in Irish banks -- and in other parts of Europe -- take a look at my Foolish colleague, Cliff D'Arcy's article: Savers Get A Stronger Safety-Net.

Longer notice accounts

If you have a larger deposit of £1,000 or more and you're happy to lock your money away for a month or two, I would suggest one of these accounts:

30 day notice

West Bromwich Building Society's Crown Account offers a generous rate of 6.56% AER with 30 days notice which includes a bonus of 1% until 31 August 2009.

60 day notice

Meanwhile, Heritable Bank offers a decent 60 day notice account with a higher rate of 6.60%, including a 0.60% bonus for the first 12 months. The rate is guaranteed to beat the base rate by at least 0.30% until 1 May 2011. However there are restrictions which allow just four withdrawals a year.

I still think these rates could be a little higher given the longish notice period required for withdrawals. After all, the rates on offer are only just ahead of the most competitive instant access accounts. That said if you're never likely to need your money in a hurry, why not take advantage of a slightly better return on your savings?

These accounts are also great for encouraging a good savings habit by removing the opportunity to splurge. So, if you're trying to become a better saver -- or you're already a saver, not a spender -- why not choose a notice savings account?

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