No-access accounts give poor rewards

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The Independent Online

Thousands of savers who have money trapped in accounts requiring them to give notice of withdrawals are earning poor rates of interest.

Thousands of savers who have money trapped in accounts requiring them to give notice of withdrawals are earning poor rates of interest.

Independent comparison service MoneyExpert warns that savers who give up instant access to their cash should not necessarily expect better rates of interest. Traditionally, most banks and building societies have paid the best interest rates to savers who are required to give notice of any withdrawals. Instant-access account holders have typically received lower rates, while those taking out cash from notice accounts early have paid penalties.

MoneyExpert says the top rate of interest on the six best notice accounts is currently 5.2 per cent, just a fraction more than the average 5.1 per cent paid by the six best instant-access internet-based deals. Even non-internet accounts often beat the best notice accounts. The AA's Telephone Savings 2 dealoffers 5.26 per cent over the next 12 months.

Sean Gardner, MoneyExpert's chief executive, said: "The days where you had to accept conditions on your account to receive the best deals are gone. You don't have to lock your money away to earn higher rates of interest."

In some cases, notice accounts pay worse interest rates than instant-access products. Banks and building societies, including Abbey, Cheltenham & Gloucester, HSBC and Nationwide, all pay less than 3.5 per cent a year on notice accounts, even on balances of up to £5,000.

At Abbey, the Investor 60 account, which requires 60 days notice of withdrawals, pays just 1.8 per cent a year on £5,000, though it does allow savers to take out money with penalty three times a year.

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