The best regular savings accounts

Simon Ward
by Lovemoney Staff Simon Ward on 13 March 2013  |  Comments 3 comments

If you want to save some money each month, there are a range of options. Here are the top rates at the moment.

The best regular savings accounts

Regular savings accounts, as their name suggests, reward you for regularly saving into them. If you’re saving up for a big purchase or want to put some money away for the short term, they can be a good option.

As savings interest rates continue to fall, regular savings accounts are offering far better interest rates than instant access and short-term notice accounts.

But bear in mind that you need to be able to save money each month into a regular savings account to benefit from these better rates. And most accounts will only allow you to save for a set period after opening, usually a year. If you withdraw money or close the account during that period you'll get a much lower interest rate.

There are also restrictions in terms of the maximum amount you can save each month. If you have a lump sum to save, take a look at The top fixed rate savings bonds, or for tax-free savings The UK's best Cash ISAs.

You should also remember that because you’re putting a little aside each month, you won’t earn the same amount of interest over a year as you would if you deposited a lump sum. That’s because you won’t have the maximum amount saved away until the final month of the year.

Let’s have a look at the top accounts on offer at the moment.

Top accounts… with strings attached

The top-paying regular savings accounts at the moment are only available to existing customers of the banks or building societies offering them.

Account

Interest rate AER

Minimum monthly deposit

Maximum monthly/annual deposit

Minimum term

Need to know

First Direct Regular Saver

6.00%

£25

£300/£3,600

One year

Only available to first direct 1st Account customers.

You can reduce monthly payments without penalty.

HSBC Regular Saver

6.00%

£25

£250/£3,000

One year

Only available to HSBC Premier, Advance, Advance (Graduate) and Passport customers.

M&S Bank Monthly Saver

6.00%

£25

£250/£3,000

One year

Only available to M&S Premium Current Account customers.

Norwich & Peterborough BS Gold Savings

5.00%

£20

£250/£3,000

One year

Only available to N&P Gold Classic Current Account customers paying in a minimum of £500 each month.

While that might look restrictive, it’s worth bearing in mind that First Direct’s 1st Account has consistently been voted one of the best for customer service. And the bank is currently offering £100 if you switch your account to a 1st Account.

The other regular savers here are all linked to so-called ‘packaged accounts’, which charge a monthly fee in return for a range of benefits, or accounts requiring a high annual salary. If you are tempted to switch your current account to a packaged account to take advantage of the regular savings rates, do your sums. Make sure you’ll a) use the benefits of the current account and b) make enough interest from the saving account to cover the current account fees.

The top accounts with withdrawal penalties

Now let’s look at the best accounts that don’t require you to be an existing customer to qualify but do penalise you if you make withdrawals during your minimum term.

Account

Interest rate AER

Minimum monthly deposit

Maximum monthly/annual deposit

Minimum term

Need to know

Access

Norwich & Peterborough BS Family Regular Savings Account

5.00% (includes 3.00% bonus)

£1

£250/£3,000

One year

One penalty-free withdrawal permitted.

Only available to people with dependent children up to 16 years of age (or 18 if they are in full-time education).

Branch, online, post

 

Norwich & Peterborough BS E-Family Regular Saver

5.00% (includes 3.00% bonus)

£1

£250/£3,000

One year

One penalty-free withdrawal permitted.

Only available to people with dependent children up to 16 years of age (or 18 if they are in full-time education).

Online

West Brom BS Regular Saver

4.10%

£10

£250/£3,000

One year

No withdrawals allowed.

Branch

Norwich & Peterborough BS Regular Saver Account

4.00% (includes 1.50% bonus)

£1

£250/£3,000

One year

One penalty-free withdrawal permitted.

Branch, online, phone, post

Norwich & Peterborough BS E-Regular Saver Account

4.00% (includes 1.50% bonus)

£1

£250/£3,000

One year

One penalty-free withdrawal permitted.

Online

The top accounts with no penalties

If you want the option to have access to your cash, for example in an emergency, you’ll get a lower interest rate. But the top rates in this category are still pretty competitive, particularly if you’ll have to manage your account online because you don’t have a building society branch near you.

Account

Interest rate AER

Minimum monthly deposit

Maximum monthly/annual deposit

Minimum term

Access

Kent Reliance BS One Year Regular Savings Account

4.00%

£25

£500/£6,000

One year

Branch

Saffron BS 12 Month Fixed Rate Regular Saver Issue 2

4.00%

£10

£200/£2,400

One year

Branch, post

 

Barclays Monthly Savings

3.03%  (higher rate of 3.25% paid in months when you don’t make a withdrawal)

£20

£250/£3,000

One year

Branch (online and phone if you’re a Barclays current account customer)

Ulster Bank Special Interest Deposit Account

3.00% (1.5% paid on remainder of any balance over £15,000)

£1

£1,000/£12,000

None

Branch, online, phone

The Financial Services Compensation Scheme

Finally, just a reminder that all the above regular savings accounts are covered by the Financial Services Compensation Scheme (FSCS).  This guarantees your savings up to £85,000 per bank or building society group (if you want to see who owns who, read Who owns your bank or building society?) in the event that they go under.

More on savings

Compare savings accounts

The top fixed rate savings bonds

The UK's best Cash ISAs

Top Cash ISAs for transfers

The best instant access savings accounts

Top savings accounts for kids

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Comments (3)

  • Simon Ward
    Love rating 8
    Simon Ward said

    Hi teafoo,

    The HSBC Regular Saver 6% rate is only available to customers holding one of the accounts listed in the table above.

    From the Regular Saver page on the HSBC website:

    "HSBC Premier is subject to financial eligibility criteria. HSBC Advance Bank Account currently costs £6 per month for the first 3 months, then reverting to the standard price, currently £12.95 per month. HSBC Passport costs £8 per month and has an initial 12 month contract."

    The HSBC Premier eligibility criteria is:

    "You have either joint savings or investments of at least £50,000 with HSBC in the UK. We request that your main income is paid into your HSBC Premier Bank Account;"

    or

    "You have an annual income of at least £100,000 paid into your HSBC Premier Bank Account and either:

    a mortgage(s) of at least £300,000 with HSBC in the UK,

    a product taken out through our independent financial advisory service, excluding mortgage-related insurance."

    If you don't meet these criteria, you pay a £25 a month fee. While not strictly speaking a packaged account, by its nature it's an account that's only open to a minority of people. Anyone else would need to open one of the other packaged accounts to qualify for the Regular Saver. I will clarify in the article.

    Best wishes

    Simon

    Report on 03 December 2012  |  Love thisLove  0 loves
  • Soruk
    Love rating 9
    Soruk said

    For the benefit of anyone stumbling upon this thread, if you want the First Direct deal get your skates on, as it's being withdrawn from sale (temporarily, according to their page here http://www2.firstdirect.com/1/2/savings/regular-savings-account ) as I was told when I closed my old one and started a new one today.

    Report on 29 January 2013  |  Love thisLove  0 loves

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