First Direct has reintroduced its popular regular savings account, but is it as good as it was?
Current account holders with First Direct can now access to its Regular Saver account again after it was re-launched.
It offers a competitive interest rate of 6% AER and you can save between £25 and £300 every month but you won’t have access to the cash for 12 months.
To be eligible you also need to switch to the bank, so is it worth it?
What First Direct's Regular Saver offers
First Direct's Regular Saver first launched in November 2010, although the previous interest rate, which was available until January this year, was a higher 8%.
But the 6% on offer now isn’t bad and beats all the one-year fixed rate savings accounts currently on the market, although these allow you to put away larger sums of money.
As I've already said, to apply for a Regular Saver account you’ll need to have a 1st Account with the bank. This account requires you to pay in £1,000 into the account each month – the amount was recently reduced from £1,500 – or hold another product (such as a credit card, loan, mortgage, or car or home insurance policy) with the bank, else you'll be charged £10 a month. But you'll get £100 if you switch your current account to First Direct, which is a nice little bonus.
If you put away the maximum £300 a month for a year into the Regular Saver, you’d receive £117 in gross interest (£93 net) – not a bad rate when looking at the rest of the savings market where returns are pretty dismal right now. And if you don't save the maximum amount in any month, your savings limit gets rolled over on top of the next month's.
But if you’re not already a First Direct customer and don’t want to switch, there are other regular savings accounts around.
HSBC Regular Saver
The regular saver account from HSBC is pretty similar although the interest rate you get depends on the type of current account you have.
The top rate of 6% AER is only available if you have one of the following accounts: HSBC Premier, HSBC Advance, HSBC Advance (Graduate) or HSBC Passport customer. To get one of these you’ll have to pay a monthly fee, ranging from £8 to £12.95.
Or you can earn 4% AER with a standard account, Bank Account Pay Monthly or Graduate Bank Account. But, again, you’ll need to pay £15 a month to get the standard bank account – so it’s worth factoring this in before you sign up.
You can save up to £250 a month with this account so over 12 months you could gain £97 in interest if you put away the full amount. But this is £20 less than you can get with First Direct, and you could be paying £155.40 a year in addition for a bank account.
Lloyds Monthly Saver
The regular saver offering from Lloyds has a lower interest rate of 2% AER and you can save between £25 and £250 per month.
To qualify you’ll need to have a Lloyds TSB current account and you can make as many withdrawals as you want during the 12-month term of the account.
Although the rate is lower, this account is good as it’ll let you have early access to your cash.
However, if it’s interest you’re after, there are better options and there's also a whole host of regular saver accounts which don’t require you to sign up to a current account.
The top 'no strings' regular savings accounts
|
Account |
Interest rate (AER) |
Monthly amount |
Access |
|
West Brom BS: Fixed-Rate Regular Saver |
4.10% |
£10-£250 |
Branch |
|
KRBS: Regular Savings Account |
4% |
£25-£500 |
Branch, post |
|
Norwich & Peterborough BS: Regular Saver |
4% |
£1-£250 |
Branch, post |
|
Cheshire BS: Platinum Monthly Saver (Issue 7) |
4% |
£100-£500 |
Branch, post |
|
Barclays: Monthly Savings |
3.25% |
£20-£250 |
Online, phone, branch |
If you think you might need access to your cash sooner there are other options. An instant-access savings account is one but the rates are pretty poor right now.
Instead you could get a higher interest rate with a current account. Right now Nationwide has the market-leading account, which pays 5% interest on balances up to £2,500,.
Santander has a similar deal with its 123 current account,which pays cashback on household items and you can get 3% on balances between £3,000 and £20,000. You can read more on these in Why current accounts are better than savings accounts.