Notice vs Six month

M4rtyman

Over the next 6 weeks, I have three 1yr bonds maturing and will be looking to re-invest elsewhere. Normally I would just lump it all in some new 1yr fixed rate accounts, but as it looks like there will be more interest rate rises, I was thinking of maybe splitting it up a bit and investing half of it in a six-month account, looking to jump on a higher rate in the spring.

However, I see that 'Notice accounts' tend to have better interest rates than six-month accounts, which I find a bit strange, because you can just "create your own" six-month account using the Notice accounts.

Am I missing something? What really is the benefit of a six-month fixed rate account when you can get better rates using "Notice accounts" over the same length of time?

tomla

I think you could name the providers, notice periods and the rates to see if there is some explanation that could be provided for you.

But generally there is always competition in the savings market (and even more when rates are rising). You might just be experiencing the thing you are hoping will happen, providers increasing rates,  on this occasion the notice account you have seen has gone up before the 6 month accounts have increased.

refluxer

6 month fixed rate accounts seem to be a bit of a niche savings product and not widely offered. Rates haven't increased like they have with other easy access and fixed rate accounts with longer periods.

I took one out with Atom at 2% back in early May, when the best easy access account was Chase which was an outlier at 1.5%, with the next best being 1.1 to 1.2% and the best 1 Year Fixed Rate was 2.15%. Back then, 2% for 6 months was a great rate but now, with the best easy access accounts approaching (or even beating) that rate and 1 year fixes at over 3.3%, 6 month fixes have been somewhat left behind (unless you're prepare to mess about with an intermediary like Flagstone or Raisin, that is).

IMO, the best notice accounts currently offer a better option - you can fix at higher rates for less time (eg. 3 months) and, unlike fixed rate accounts, their rates can (and sometimes do) increase occasionally as the base rate rises, although sometimes you do have to shift the money (and therefore reset the notice period) to the new accounts offering the higher rates (eg. OakNorth).

If you want convenience, then Zopa are worth considering. They've recently increased their easy access account to 1.85% and their 7 day (1.90%), 31 day (2.05%) and 95 day (2.25%) 'boosted pots' offer a good way of locking your money away for shorter durations at enhanced rates without the hassle of having to create separate accounts. I am currently midway through my 31 day boosted pot notice period and the rate has been increased from 1.95% to 2.05% without any action needed from me.

M4rtyman

Yeah - that's it. I just don't see any benefit in the 6-months market, when notice accounts offer higher rates with either similar or less restriction.

Might take half my pot and stick it in the Oaknorth, with the plan of popping it into a 1yr account in the spring. I'll put the other half into a 1yr account now, with the plan being to split maturation dates over the 12mth period going forward, rather than all at once like now. Means I don't have to wait as long for taking dvantage of any interest rate rises.

Something to think about

soulsaver

look at Zopa Smart saver - has 95 day notice 'pot' (amongst 7 day, 31, day and easy access). As you say, you can create your 6 month or 7 month or 5 month playing with how you fund the various options. 

Smarter Savings built for real life - Zopa

Do your research, because it's just about the most flexible account going for creating your personal optimum solution.

M4rtyman

Yeah - one of the current fixed accounts that's maturing next week, is a Zopa 1yr fixed. So will probably just lump that into a Zopa Smart saver pot until the spring