Regular savings accounts offer above-inflation interest rates, providing you stick to their rules. Here, we look at the best options for monthly savers.
Inflation is finally down to 2% and interest rates are expected to be cut this year.
However, this is bad news for savers with money tucked away in banks and building societies. The rates they can earn are also likely to fall and that means now is the best time to search around for the best deals.
One option is a regular savings account.
No traditional savings account even comes close to the 8% interest rates that the best regular savings account currently offers.
However, these accounts are often tied to other products and have various conditions attached - here's how to get started.
How regular savings accounts work
Regular savings accounts, as their name suggests, reward you for regularly saving in 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.
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 available to everyone
|
Account |
Interest rate AER |
Min monthly deposit |
Max monthly deposit |
Term |
|---|---|---|---|---|
|
Principality BS 6 Month Regular Saver |
8% |
£1 |
£200 |
6 month bond |
|
West Brom BS Fixed Rate Regular Saver (Issue 7) |
6% | £10 | £250 | 12 month bond |
|
Principality BS 1 Year Regular Saver Bond (Issue 34) |
5.5% |
£1 |
£250 |
1 year bond |
|
Gatehouse Bank Regular Saver Account (Issue 2) |
5.3% |
£1 |
£300 |
1 year bond |
| Hinkley & Rugby BS Regular Saver 30 Day Notice Issue 2 | 5.1% | £0 | £1,000 | 2 year bond |
Top accounts for existing customers
Some accounts are reserved for people who hold a current account with that bank.
Here are the top accounts with strings attached:
|
Account |
Interest rate AER |
Min monthly deposit |
Max monthly deposit |
Term |
|---|---|---|---|---|
|
First Direct Regular Saver Account |
7.00% |
£25 |
£300 |
12 Month Bond |
|
The Co-operative Bank Regular Saver Issue 1 |
7.00% | £0 | £250 | 12 Month Bond |
|
Nationwide BS Flex Regular Saver Issue 3 |
6.50% |
£0 |
£200 |
Regular Savings |
|
Vernon BS Online Regular Saver |
6.50% |
£25 |
£250 |
Regular Savings |
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.