Notice Savers: A mix between a savings account and term deposit
A notice saver offers interest on your money, however you need to give a certain amount of notice if you decide you want to withdraw your money (usually 31, 60 or 90 days).
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The Finder Score is a simple score out of 10. The higher a savings account's score, the better we think it is for the average customer.
We score each savings account in our database of hundreds based on a data-driven methodology with 2 main criteria: Does the account offer a high interest rate? And is it easy for savers to actually earn that rate?
Key takeaways
- Notice saver accounts require you to give notice before making a withdrawal, usually either 31, 60 or 90 days.
- A notice saver is less flexible than a savings account which allows you to access your money whenever you want, but is more flexible than a term deposit.
- A high interest savings account will usually offer a better interest rate than a notice saver, but you'll need to jump through some hoops to earn interest.
How does a notice saver work?
Most notice savers for personal use are offered on 31, 60 or 90 days' notice, though some banks set their own period (for example, BOQ Specialist Bank's 32-day notice account). The rate of return also increases 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 choose. So if you sign on for a 60-day notice saver, you will need to tell the bank 60 days in advance if you want access to your money.
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:
A notice period that suits you
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.
Competitive interest rate
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.
The ability to constantly add to your balance
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.
Minimum deposit requirements
You will want to check to ensure that you are able to meet any minimum deposit requirement for a notice saver account.
It can be linked with your regular bank account
As with most high interest savings accounts, you will need a bank 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.
Notice saver vs term deposit vs savings account
Notice savers are similar to savings accounts and term deposits, however there are a few key differences.
Savings accounts: A savings account usually offers a higher interest rate than a notice saver and term deposit, and you can access your money instantly when you need it. However, there are often monthly account conditions to meet so it's not a set-and-forget option. You can compare savings accounts to see how the rates compare.
Term deposit: A term deposit is locked for the duration of the term length, which can be between 1 month to 5 years. Term deposits sometimes offer better rates than notice savers, in exchange for locking your money away for longer. If you dip into your savings regularly a term deposit may not be the right solution for you.
Our expert says
"Unlike a term deposit where your initial deposit is locked in, with a notice saver you can add more money into the account whenever you want.
But another key difference is that the interest offered on notice saver accounts is variable, meaning it can change at any time. In comparison, a term deposit rate is fixed meaning it can't change until your term reaches maturity."
If you're looking for a set-and-forget option for your cash but you don't like the idea of a notice period to make a withdrawal, a savings account with no conditions to meet could suit you well.
What are the pros and cons of opening a notice saver account?
Pros
- Interest rates. You can earn interest on your money while you're not using it.
- 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 can access the money if you need it for a big purchase, however you'll need to give notice.
Cons
- Notice 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.
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