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What is a nominated account for savings account?

Last Edit: 13/08/18

Many savings accounts -- for example those offered by the Post Office and theAA -- usually only allow funds to be transferred to one other bank account, known as a nominated account. The nominated account is typically a current account, where a direct debit can be setup and funds can then be transferred between the savings account and the nominated account.

It will depend upon the 'terms of usage' of the savings account whether there will be a charge, penalty or notice period for transferring funds between a savings account and a nominated account -- typically only for withdraws from the savings account . While some savings account will allow unlimited withdraws without any penalty, some will issue a charge: such as a loss of 30 days interest on the funds withdrawn.

Funds can typically only been withdrawn during working days, and at best usually by next day; although it may take 3-5 days. The process should be very simple if a customer has access to their savings account online. The user interface for the account should provide a transfer option, where a customer simple has to input the amount of funds they wish to withdraw to their nominated account.

Alongside withdraws and deposit, the nominated account can also serve as the account that receives the interest income earnt by the savings account; customers will be given one of two options when opening their savings account: interest placed in their savings account or their nominated account. Interest can be received either monthly or annually; although there may be additional options such as quarterly.

Nominated accounts also give the bank the option of increasing the security of the savings account. If the nominated account can only be nominated if it matches the account name of the savings account, this will ensure that anyone who illegally accesses the savings account cannot withdraw funds to their own account by changing the nominated account.