The best regular savings accounts

Updated on 04 October 2016 | 4 Comments

Many banks are slashing the rates on regular savings accounts. Here, we look at the best options for monthly savers.

Savers have been dealt another blow after the rates on three of the most popular regular savings accounts were cut in the last week.

HSBC, First Direct and and M&S Bank have all cut the rate on their top monthly saver accounts for new applicants from 6% to 5%.

How regular savings accounts work

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.

Despite the latest round of cuts, regular savings accounts still offer 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

5%

£25

£300/£3,600

One year

Only available to first direct 1st Account customers.

HSBC Regular Saver

5%

£25

£250/£3,000

One year

Only available to HSBC Premier or Advance customers.

M&S Bank Monthly Saver

5%

£25

£250/£3,000

One year

Only available to M&S Premium Current Account customers.

Nationwide Flexclusive Regular Saver

5%

£25

£500/£6,000

One year

Only available to Nationwide current account holders

Norwich & Peterborough BS Gold Savings

4.00%

£20

£250/£3,000

One year

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

Club Lloyds Monthly Saver

3%

£25

£400/£4,800

One year

Only available to Club Lloyds or Club Lloyds Added Value current account customers.

Santander Regular Saver

3%

£20

£250/£3,000

One year

Only available to Santander current account customers.

HSBC Regular Saver

3%

£25

£250/£3,000

One year

Only available to Bank Account, Bank Account Pay Monthly or Graduate Bank Account customers.

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

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

Nottingham Building Society Sports Aid Regular Saver

3%

£10

£250/£4,750

Until March 31 2018

No withdrawals allowed.

Branch

Leeds Building Society Regular Saver

2.3% (includes bonus of 1.80%)

£50

£250/£3,000

One year

One withdrawal is permitted each Bonus period (from 1 September – 31 August each year).

Branch, post

Interestingly the top accounts that penalise you for making withdrawals are actually less competitive than the best deals that are penalty-free.

The top accounts with no penalties

If you want the option to have access to your cash, for example in an emergency, you would normally have to settle for a lower interest rate.

But the top rates in this category are better than more restricted accounts at the moment!

Account

Interest rate AER

Minimum monthly deposit

Maximum monthly/annual deposit

Minimum term

Access

Saffron BS 12 Month Fixed Rate Members’ Regular Saver (Issue 3)

3.5%

£10

£200/£2,400

One year

Branch, post

Kent Reliance BS One Year Regular Savings Account

3.25%

£25

£500/£6,000

One year

Branch

Virgin Money

2.25%

£1

£250/£3,000

One year

Online

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 £75,000 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.

Compare savings accounts

More on savings:

The UK's best Cash ISAs

The top fixed rate savings bonds

 

The best instant access savings accounts

 

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