News
February 2024
- Brits could earn an extra £136.50 each year by starting to save into a regular savings account1.
- First Direct has the highest rate for existing customers at 7%
- Lloyds Bank allows existing customers to save the most each month in their regular saver at £400
- The best interest rate (for non-existing account holders) is 6.17% at Natwest (maximum £5,000)
Savers could be making their money go further by opening a regular savings account. Many Brits have cash sitting in a current account or a low interest savings account, meaning they are missing out on the interest that could be gained from opening a high interest, regular savings account.
To help Brits navigate the different options available, Defaqto, one of the UK’s most trusted sources of financial product and market intelligence, has compared regular savings accounts to find the best deals2.
Katie Brain, Consumer Banking Expert at Defaqto, said:
“A regular savings account offers high interest rates in return for a regular monthly savings commitment from account holders and there are some great deals on the market at the moment, with interest rates in the 6-7% range. This is significant when compared to current accounts, as they typically pay a very low rate of interest or even no interest at all.
“ Although the Club Lloyds’ current account pays 3% up to a balance of £5,000 and their Club Lloyds Monthly Saver is 6.25%.
“It is, however, worth noting that though regular savings accounts have higher interest rates, they only allow a certain amount to be deposited per month. This means that customers can’t just move their entire savings pot into these regular savings accounts in one go. One of the best deals is the First Direct Regular Saver which has an interest rate of 7%. This account has a maximum monthly deposit of £300 but, could earn you an additional £136.50 in a year if you were to put £300 into the account each month over a 12 month period.”
“The best regular savings accounts are often only available to existing current account holders, so it is wise to check with your current account provider before shopping around. You’ll also find that a range of T&Cs apply, so you should always check these meet your individual needs before opening an account. Key things to look out for include deposit limits, potential penalties if monthly payments are not made and any specific withdrawal conditions.”
Best regular savings accounts for existing customers only:
Provider | Product | Existing Customer Type | Interest Rate (AER) | Max Balance for Highest Interest | Term in Months | Rate Type | Max Monthly Deposit | Withdrawal Conditions |
First Direct | Regular Saver | Current account | 7% | Unlimited | 12 | Fixed | £300 | No withdrawals permitted |
Skipton Building Society | Member Regular Saver (Issue 3) | Member | 7% | £3,000 | 12 | Fixed | £250 | No withdrawals permitted |
Nationwide Building Society | Flex Regular Saver (Issue 3) | Current account | 6.50% | Unlimited | 12 | Variable | £200 | Max number of 3 withdrawals during the term otherwise the bonus is lost |
Lloyds Bank | Club Lloyds Monthly Saver | Current account | 6.25% | Unlimited | 12 | Fixed | £400 | Instant access |
Best regular savings accounts:
Provider | Product | Interest Rate (AER) | Maximum Balance for Highest Interest | Term in Months | Rate Type | Maximum Monthly Deposit | Withdrawal Conditions |
NatWest | Digital Regular Saver | 6.17% | £5,000 | na | variable | £150 | Instant access |
West Bromwich Building Society | Fixed Rate Regular Saver (Issue 7) | 6% | unlimited | 12 | fixed | £250 | No withdrawals permitted during the term |
Saffron Building Society | Small Saver | 5.75% | unlimited | 12 | variable | £50 | Instant access |
Bank of Scotland | Monthly Saver | 5.50% | unlimited | 12 | fixed | £250 | Instant access |
Halifax | Regular Saver | 5.50% | unlimited | 12 | fixed | £250 | No withdrawals permitted during the term |
Here are Katie’s seven top tips when considering which regular savings account is best for you:
- Check your existing bank account provider before looking to other providers. Your existing bank may have the best rates.
- Remember to check the maximum balance that the rate applies to. Some accounts like Natwest’ has a limit (£5,000), whereas West Bromwich Building Society has a slightly lower rate but an unlimited balance.
- You should also check the term length to make sure this meets your needs. Many of the best deals have around a 12 month term, which can be useful for annual savings such as Christmas or holiday funds.
- Whilst a high rate is a big factor when choosing an account, you should also check the rate type. The differences between variable vs fixed rate products should play a role in your decision.
- Check the maximum monthly deposit amount. If you want to save a high monthly amount, you may be limited by some accounts.
- Will you need flexibility for accessing your savings? Some accounts limit access considerably, meaning you may be restricted or penalised when making withdrawals.
- If you can’t commit to saving regularly each month, there are still good deals available in instant access account rates at over 5%.
As you can see there are lots of things to consider when choosing the right account for you; how much you want to deposit, what access you may need, and whether the maximum amount you can earn for the high rate would apply to you. Spending a little time researching and comparing products is advisable to help make the most of your money and create good saving habits for the future.
Defaqto maintains the UK’s most comprehensive financial product database, providing independent expertise, insights, tools and technology to help everyone make smarter financial decisions, and has put together the above product recommendations based on products available on 6 February 2024.
