Regular savings: how to earn 2.71% without any risk

If you’re prepared to put the work in, you could earn 2.71% on your savings in one year.

It’s getting harder to earn a decent rate on your savings.

While rates languish at record lows and one of the best rates has been slashed there is still another route to secure decent returns.

It involves signing up to four high-interest regular savings accounts with some of the top banks and building societies in the UK.

That might sound like a lot of hard work but taking advantage of the linked regular savings accounts means you could earn a rate of 2.71% in one year – far more than you can get in a one-year fixed rate bond at the moment.

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What you need to do

The top regular monthly savings accounts available right now are available from First Direct, HSBC, M&S Bank and Nationwide, which all pay 5%.

But in order to access these deals you will need to have a linked current account with each of the providers.

Below I’ve set out the current accounts that make the most sense to open in order to access these deals along with the conditions you need to meet each month to keep them open.

Current account	Funding requirement each month	Direct Debit set up required	Other requirements
First Direct 1^st Account	£1,000	-	-
M&S Bank Current Account	£1,000	Two active Direct Debits	Only available to those that switch using the Current Account Switch Service
HSBC Advance Current Account	£1,750	-	-
Nationwide FlexDirect	£1,000	-	-

You can pick one of these accounts as your main account and then set up three Standing Orders that deposits the funding requirement for the other accounts each month.

How the sums work

Below are the four linked regular saver accounts that you will get access to and how much each will allow you to earn in interest in one year.

Regular saver account	Interest rate	Min/max monthly contribution	Maximum contribution over 12 months	Maximum interest earned after 12 months
First Direct Regular Saver	5%	£25/£300	£3,600	£97.50
M&S Bank Monthly Saver	5%	£25/£250	£3,000	£81.25
HSBC Regular Saver	5%	£25/£250	£3,000	£81.25
Nationwide Flexclusive Regular Saver	5%	£1/£500	£6,000	£162.50
Total after one year			£15,600	£422.50

If you can drip feed £1,300 a month into these four accounts, you will save £15,600 and take away a tidy sum of £422.50 for your efforts, which amounts to a rate of 2.71%.

This trick can be doubly effective for couples, as they can put away £31,200 in all and earn this top rate. The combined effort would produce an impressive £845 after one year.

Should you bother?

If you’re fed up with miserly savings rates but don’t want to risk your cash this could be an option to make your money work harder for you.

All the banks are covered under the UK Savings safety guarantee and the interest earned would be free of tax under the new UK Personal Savings Allowance.

It does take a bit of doing to set up and keep stock of, and you'll need to ensure you satisfy the conditions of the current accounts to be eligible, but putting in the extra work does pay off.

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