Notice Cash ISAs

Notice cash ISAs explained

Notice cash ISAs are a type of variable rate ISA that allow savers to add to and withdraw from their savings as they choose.

However, unlike no notice, or easy access, cash ISAs, notice ISAs require you to wait a minimum amount of time before you can withdraw your money. For example, if you withdraw from a 30-day notice ISA, you will only receive your money 30 days after making your withdrawal request. Notice periods between 30 days and 90 days are particularly common.

Some providers may allow you to withdraw your money straightaway, without waiting the full notice period, but this will usually be subject to a penalty, such as a loss of interest.

Because of the delay before you can withdraw from the account, notice ISAs may pay a higher rate of interest than no notice ISAs. However, this isn’t always the case, so it’s worth comparing notice ISAs with easy access ISAs that offer instant access to your savings.

Notice ISAs or notice savings accounts?

Notice ISAs and notice savings accounts work in the same way as they both require you to wait a specified number of days before accessing your money.

The key difference between notice ISAs and notice savings accounts is that you’re not liable to pay tax on the interest you earn on a notice ISA.

Notice savings accounts typically pay a higher rate of interest than notice ISAs, but you need to pay tax if the total amount of interest you earn across your savings accounts breaches your Personal Savings Allowance (PSA).

By contrast, notice ISAs allow you to deposit up to £20,000 each tax-year completely tax-free.

Alternatives to notice cash ISAs

Instead of a notice cash ISA, you could consider an easy access cash ISA. An easy access ISA allows you to dip in and out of your savings without needing to wait a notice period, which makes it a more appealing option if you want to be able to withdraw money from your savings immediately.

Some no notice ISAs may pay more competitive rates than notice ISAs, so it’s worth comparing both types of account before opening an account.

Whether you choose a notice ISA or an easy access ISA, make sure you check whether it follows flexible rules or not. A flexible ISA allows you to withdraw from and add to your account without affecting your ISA allowance.

Interest rates can change on a notice ISA so, if you want to secure a guaranteed rate, you could consider a fixed-rate ISA instead. One-year fixed ISAs are a popular option but there are also two-, three and five-year fixed ISAs available.

Bear in mind that you can’t withdraw money from a fixed-rate ISA or transfer to a new ISA provider, unless you’re willing to sacrifice some interest.

If you’re not at risk of earning more interest than your Personal Savings Allowance, which is set at £1,000 per year for basic-rate taxpayers, you could consider a standard notice savings account or another type of savings account instead of an ISA.

Savings accounts often pay a higher rate than their equivalent ISA, so they could be a more appealing option for savers wanting to maximise the returns on their money.