Earn 8% on your savings (with a catch)

Find out how you can get around tricky eligibility rules and earn an ultra high rate on your savings!

It’s difficult to escape today’s dismal savings rates. After all, even the best easy access savings accounts are paying less than 3% right now. And with the Monetary Policy Committee agreeing to keep the base rate at 0.5% for yet another month, it doesn’t look like returns will improve any time soon.

But, having said that, it is possible to earn rates which are way, way above the base rate. If you’re happy to stash some cash away every month, a special high-interest regular saver account could be right up your street. In fact, the top account is paying a whopping rate of 8%!

Is a regular saver right for you?

Because regular savers often pay more generous rates than ordinary savings accounts, you’ll find they are more restrictive. In fact, you should only consider a regular saver if the following applies:

• You’re able to save every month.

Regular savers always have a minimum deposit which the account must be funded with each month until the term ends. If you save too little, or you skip a month completely, then expect to be hit with a heavy loss of interest.

• You won’t exceed the maximum deposit.

In a similar way, you must be careful not to save more than the maximum amount permitted. Because of the generous rates on offer, all regular savers operate an upper savings limit. If you accidentally exceed it, you may trigger a penalty.

• You’re happy to leave your money untouched for the term.

Once again, you’ll most likely be penalised if you make a withdrawal. You should only go for a regular saver if you know you won’t need access to your cash.

• You want a fixed rate.

This is the great thing about regular savers. Many of them offer impressive fixed rates, so you’ll get a great guaranteed return which should stay competitive for the duration of the term. Variable rates accounts would have to improve dramatically before surpassing the rates available on the top regular savers.

• You’re happy to save regularly even if you have a lump sum going spare.

Of course, with a regular saver you’ll be drip feeding money into your account, which means you’ll only earn a high rate on a relatively small balance in the early months. With a lump sum, on the other hand, you’ll be earning interest on your whole balance - albeit at a lower rate - from day one.

So, which is the best option?

To work that out you’ll need to do a little number crunching. Let’s assume you have £3,000 to save and you have a choice of putting the full amount in a one-year fixed rate bond paying 3%, or saving £250 a month into a one-year regular saver with a fixed rate of 6%.

If you chose the bond, you would earn £90 in interest after a year. But, using the regular saver would generate interest of £96.63 over the same period. What’s more, if you have a lump sum available upfront, you could keep it in another interest-bearing account while dipping into it every month to fund your regular saver. That would bump up your overall interest even more.

Having said that, if you don’t qualify for a regular saver with such a generous rate, juggling your lump sum in this way may not be worthwhile. This leads me onto my final point...

• You meet the eligibility criteria.

Unfortunately, this is where the big catch comes in. Many of the best regular savers are only available under strict eligibility criteria. For example, the top 8% regular saver I mentioned earlier is open to HSBC Premier, Passport, Advance or Graduate (Advance) current account customers only.

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Beat the eligibility criteria

I wouldn’t recommend you try to open one of these HBSC accounts to take advantage of the preferential savings rate since, some they are premium accounts with monthly fees or are only open to very high earners.

However, if you’re prepared to jump through one or two hoops to maximise your return, I would recommend the second best-buy in the table below - the Santander Super Fixed Rate Monthly Saver. This account pays a great fixed rate of 6% for a year.

To qualify for this account you’ll need to switch to a Santander current account using their account transfer service. But this is no major stumbling block since Santander offers some great, market-leading bank accounts.

For example, the Preferred In-Credit Rate Current Account would be a fantastic choice for savers who are looking for top returns on their cash. As long as you can fund the account with a least £1,000 every month (which you can immediately withdraw), you’ll earn a great fixed rate of 5% on the first £2,500 of your balance for 12 months. Then extra savings of up to £250 a month  - perhaps paid from your salary - can be moved over to the Super Fixed Rate Monthly Saver where you earn 6% fixed.

That means, if you kept a constant balance of £2,500 in the Preferred In-Credit Rate Account and transferred the full £250 per month into the monthly saver, you would earn a total of £221.63 in interest over the first year - this is an amount actually worth having!

So you can see, despite the current low-interest environment, savvy savers can still get decent returns on their cash.

For full details of all the top regular savers, check out the table below:

Top regular saver accounts

*You’ll be eligible if you have dependent children up to the age or 16, or 18 if they’re in full-time education.

Compare savings accounts at lovemoney.com

More: Even the best savings bonds are rubbish! | Guarantee the return on your easy access savings