Question about (variable) notice accounts.

TooOrangeyForCrows

Hi. I just have a quick question regarding notice accounts.
I was (before seeing that their rate drops to 4.7% tomorrow at least) in the 95 day notice account by Recognise bank at 4.95% AER

But I am just wondering that if they change their interest rate whilst you have an open account and money invested does one still have to give the same (in this case 95 days) notice period to withdraw any money?

https://www.recognisebank.co.uk/personal-savings-accounts/95-day-notice-personal-savings-account-issue-4/

SnowMan

It tells you in the product terms and conditions on page 5 and 6 in particular see 1.12

Where the change in the interest rate is not favourable to you, you may close your Account at any time up to 30
Calendar Days from the date we notify you of the change without paying any extra charges or interest for closing
the Account before the applicable Notice Period

https://www.recognisebank.co.uk/wp-content/uploads/Product-Terms-and-Conditions.pdf

TooOrangeyForCrows

Ah so you can (have to) close the account then.
Better read the closure/withdrawal terms closely to make sure I don't do one that's not the other if I do go there.
Though there are accounts paying more than their 4.7%

I guess each notice account will have their own rules? Or is it standard that they have to give you notice and a penalty free time window to close the account if their rate drops below an acceptable level (to you)?

refluxer

TooOrangeyForCrows said:

I guess each notice account will have their own rules? Or is it standard that they have to give you notice and a penalty free time window to close the account if their rate drops below an acceptable level (to you)?

When a bank wants to reduce the interest rate on a notice account, they tend to work in one of two ways. They'll either give you the same amount of notice that you have to give for withdrawals (often plus a week or two - eg. Oxbury give an additional 14 days) or they'll give you a certain amount of time (from the date they notify you of the future reduction) in which you can close your account without having to give notice.

Which of those two options they use should be stated in the account T&Cs - it normally gets mentioned in the 'Will my interest rate change?' section in the account summary box.

Both of these approaches ensure that you're never forced to accept the reduced rate, but you do need to be on the ball and pay attention to all communications from the bank in order to be able to act to avoid this. 

It's worth noting that the above approaches are for conventional, variable rate notice accounts. Base rate tracker notice accounts work differently in that the rate rises and falls in line with the BoE base rate and for that type of account, you won't get much notice of a rate change (Oxbury say a change will be applied in 'no more than 14 days' for their Base Rate Tracker notice account, for example) and there won't be an option to withdraw funds without giving the normal amount of notice.