Is time up for the notice Cash Isa?

Published by Edmund Greaves on 22 May 2018.
Last updated on 22 May 2018

Cash

Savers are finding their options on notice Cash Isas increasingly limited.

As savings vehicles goes, notice Cash Isas are seen to provide a middle ground for savers who don’t want to make longer-term commitments to stash their money, but also want to grab a better rate than just plain easy access accounts offer.

But the market appears to be undergoing something of a decline. The current best-buy notice Cash Isa on the market is the Hinckley and Rugby Building Society 120 Day Notice Account, which pays 1.2% interest. The next best account currently comes from Principality Building Society, which offers a rate of 1.1% for 60 days’ notice.

These rates pale in comparison to the current best buys available on easy-access Cash Isas. The current best buy is the Paragon Limited Edition Easy Access Cash Isa (Issue 4), offering 1.31%. The next best is the Shawbrook Bank Easy Access Cash Isa (Issue 4) at 1.25%.

Both can be opened with just £1 initial deposit, and you can access your money straight away if you need to. This begs the question: is there any point in getting a notice Cash Isa when there are easy-access accounts that give you greater control of your cash and offer superior rates?

Notice Cash Isas are now few and far between. Here’s how the number of notice Isa products available compared to easy-access Isa products on the market:

No Notice Cash Isa £10K product count (including all interest payment options) No Notice Isa £10K Gross (Average rate) Notice Cash Isa £10K product count (including all interest payment options) Notice Isa £10K Gross (Average rate)
137 0.81% 28 0.94%

Source: Moneyfacts, May 2018

Rachel Springall, a financial expert at Moneyfacts, comments: “The rate gap does come down to market share and the fact that Isas are not seen as the first port of call anymore. Currently, there are very few notice Isas in comparison to easy-access Isas, as our data shows.

“Typically, notice accounts are assumed to pay more than easy-access accounts, but this isn’t always the case as the market has changed and most of the best easy-access deals are offered by challenger banks.

“It should also be noted that not all challenger banks offer Isas and, in addition, the Personal Savings Allowance [whereby up to £1,000 of income from savings is tax-free for basic-rate taxpayers and up to £500 is tax-free for higher-rate taxpayers] has devalued the rates on Isas.”

For more on this week’s best buy rates on Cash Isas, check out the Moneywise guide to the best Cash Isa rates this week.

 

 

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