Instant Access Accounts explained

The banks and building societies offer quite literally hundreds of different savings accounts and products all designed to encourage the customer to save with them.

These products vary significantly from one to another and their suitability will depend very much upon a customer’s individual circumstances and needs.

There isn’t space here to describe them all but one classic offering is ‘the savings account’. This type of account will often break down into two basic types:

• Those that normally ask the customer to give some notice before the savings are withdrawn – typically these will be called 30, 60 or 90 day accounts to indicate how much notice the customer will need to give before they can gain access to their savings.

• Instant Access Accounts. These usually offer immediate and unrestricted access to savings via cheque, card or ATM etc.

Notice accounts are the traditional savings products that institutions have offered their clients for centuries. As the customer normally has to give a notice period before withdrawing funds, the bank or building society will therefore be able to keep the money for a longer period ‘on average’. This means they often offer customers a higher rate of interest with notice accounts than on some other types of savings accounts or products.

These sorts of savings arrangements may not suit all savers though. In today’s world people sometimes want faster and unrestricted access to their savings and having to wait 30, 60 or 90 days is not always convenient.

So the Instant Access Account was developed to offer the customer more choice.

Instant Access Accounts were designed to be very flexible. They often seek to offer customers a better interest rate than that available with a normal ‘current’ banking account AND instant, or more or less instant, access to the funds when they need them. This can prove very useful to some customers, although on the whole Instant Access Accounts may offer lower interest rates than those available through the Notice Account savings schemes.

The world of financial services moves fast though and new offerings are continually appearing. To some extent, the differences between notice period and instant access accounts are diminishing.

Over recent years new types of Instant Access Account have appeared. These are ‘hybrids’ that are a mixture of the traditional Notice and Instant Access accounts with features of both.

Some of these new Instant Access Accounts may offer the higher interest rates usually found with the traditional notice accounts, while at the same time offering more flexible access to the savings.

They may offer, for example, 3 free withdrawals a year without risking a reduction in the interest rate paid on savings.

In the final analysis, the banks and building societies will usually have available a product or service that will meet the needs of those savers looking for a good interest rate coupled with flexible access to their funds. This may be one of the familiar ‘Instant Access Accounts’ or one of the newer hybrids.

• Instant Access Accounts usually offer higher rates of interest than current accounts.

• Notice Period Accounts usually offer higher rates of interest than current or Instant Access Accounts.

• Instant Access Accounts typically give immediate and unrestricted access to the savings if needed.
• New hybrid accounts have emerged which have some characteristics of both Notice and Instant Access accounts.