Notice savers give Aussies a new way to benefit from high interest savings account with the convenience of setting your own terms.
Notice savers are a fairly new savings product before offered by a few banks in Australia. These accounts provide Australians with an alternative to the term deposit. Rather than choosing how many months you would like your money to be in the account, you choose how long of a notice to provide the bank and they release your funds when you say so. Although not as easily accessible as what you get with an on call savings account, you do get more flexibility than with a term deposit.
How does a notice saver work?
Notice savers for personal use are offered at three different tiers, 31 day, 60 day and 90 day, with the rate of return increasing as you increase the terms. If you want to access your savings after the account has been activated, you give the bank ‘notice’ and they will release the money in the time frame that you chose.
In other words, if you sign on for a 60 day notice saver, you will need to tell the bank 60 days in advance of when you want the money. This feature is helpful for those who have a habit of dipping into their savings, but still enables you to have control over when it can be withdrawn.
How do I compare notice savers?
Notice savers have unique features that could make them an appealing option for those who want to reach a savings goal, and need an extra incentive to get there. When comparing them, consider the following:
- Notification terms. You do have to choose how long of a notification you want to give when you open the account, which will require some thought as to your future needs. The lowest rates are paid on 31 day notices, and get progressively higher as you move to 90 days.
- Interest rates. The interest rate will have a direct impact on the return on your investment. If your main objective is to increase your savings rapidly you will want to choose the longer notice periods with the higher rates.
- Deposits. Unlike term deposits, notice savers lock you out from withdrawals but not on deposits. That means you can continue to add to the principal amount to increase your savings.
- Interest calculation. You get the most benefit in a savings product that calculates the interest daily and makes a monthly deposit. This allows you to benefit further with compound interest, where your earnings come from the combined total of your principal and earned interest amount.
- Deposit minimums. You will want to check to ensure that you are able to meet any minimum deposit requirement for a notice saver account.
- Linked account. As with most high interest savings account, you will need a transaction account to be linked to your notice saver. Check to make sure that your current bank will allow you to link your everyday account with a notice saver offered by another institution.
What are the advantages and disadvantages?
- Interest rates. You will get the benefit of higher interest rates with a notice saver than you would with a standard savings account.
- Continue saving. You have the option of continuing to add funds to this savings account. In some cases you can even set up regular payments from your transaction account into your notice saver.
- More flexibility. You have the ability to make investment decisions on shorter notice than you would if the money was inside of a term deposit.
- Notification time. Even though you are not locked in as with a term deposit, notice savers are still not ideal if you need your savings fast to cover the cost of an emergency.
- Variable interest rates. A fixed interest rate guarantees the growth of your money at a steady rate, while with a variable rate you could potentially lose some of the interest earnings if there is a drop in the market.
What are the risks?
As with any type of savings product, you must carefully weigh what your goals and needs are before making a final choice. This will help you to avoid:
- Missing out on higher rates. If your goal is a couple of years into the future, a term deposit will give you a better rate of return for your investment than a notice saver.
- Not meeting an emergency. This type of account still requires a waiting period before you can access the money. If you do not have other means to cover an emergency, you may want to consider splitting your savings and keeping some in an on call account just in case.
Frequently asked questions
Which Australian banks currently offer notice saver accounts?
For personal use you will find notice savers with RaboDirect and AMP, although AMP is only offering it at the 31 day notice. Businesses can also apply for this product with Westpac.
Is a notice saver an option for my SMSF?
Yes, these accounts are available for an SMSF, but you should check with its terms first.
How do you apply for a notice saver?
The process for applying for a notice saver account is the same as any other savings account. You will need to provide the bank with your personal details, proof of identification and the details of your linked account.