Looking for a savings account that isnt easy to access

Jumble80 · 25 July 2022 at 6:01PM

I'm terrible with spending spontaneously, and so I'm looking for a fixed savings account that I wont be tempted to access. One that takes more than a month to withdraw from, and has an off putting pentalty fee for early access. I'm looking for put away £40k for two years. Can anyone advise?

Nebulous2 · 25 July 2022 at 6:34PM

Here's a starter for you, from the top of this page.

Savings accounts: 1.56% easy access or up to 3.31% fixed (moneysavingexpert.com)

Look at the index on the left and click on top notice accounts.

refluxer · 25 July 2022 at 6:37PM

Jumble80 said:

I'm terrible with spending spontaneously, and so I'm looking for a fixed savings account that I wont be tempted to access. One that takes more than a month to withdraw from, and has an off putting pentalty fee for early access. I'm looking for put away £40k for two years. Can anyone advise?

You could put your money in a ~30 day notice account (Zopa are currently paying 1.65% for one with 31 days notice) - you don't pay a penalty for withdrawal, but you would have to give the applicable notice to withdraw any money.

You would get a much better interest rate if you were prepared to lock the whole amount away for the whole of that time in the best 2 Year Fixed Rate account (currently 3.1%) however you wouldn't have access to any of the money until the fixed rate period has ended. For this reason, this has to be money that you definitely won't need access to during that time.

Another option would be to put half of the money into a 2 Year Fixed rate Cash ISA (if you haven't paid into another ISA this tax year). They don't pay as much as a normal Fixed Rate account but one benefit of a Cash ISA is that you can access the money within the fixed rate period - you just have to pay a penalty to do so. The best 2 Year Fixed Rate Cash ISA is currently paying 2.6% and the penalty for withdrawal is 180 days-worth of interest.

You could do any one of these or split your money across any combination, depending on whether you think you'll need access to the money or not during that time and if so, how much. Just be aware that interest rates have been rising steadily this year and are expected to continue to rise, so the rate on a notice account might increase whereas the rate on both types of fixed rate account obviously won't.