Digital bank first direct is offering a “market-leading” 7% interest rate on its regular savings account. The rate is available to the bank’s new and existing 1st current account customers.
Regular savings accounts typically require people to deposit a set amount each month and make minimal to no withdrawals. Praising first direct’s deal, Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “A regular savings account with a term of 12 months could be a great choice, particularly for consumers who have a goal in mind or want to improve their financial wellbeing.” She added that the “top fixed rate deal” from first direct with a “market-leading return” of 7% is a “great choice for savers looking to build a nest egg over the year”.
“However, the deal is exclusive to new and existing 1st Account customers, so it’s worth comparing this deal against other accounts,” she added.
Savers can deposit up to £300 per month into the account, meaning a total of £3,600 can be saved overall. Interest is paid on maturity, and withdrawals are not permitted until the end of the term.
What else is out there?
Another major bank, Co-op, is also offering 7% tied to new and existing current account customers, but on a variable rate.
Ms Springall added: “Unlike its peers, this account allows unlimited withdrawals. However, the maximum amount savers can put away over the 12-month term is £3,000, which is lower than £3,600 from first direct.”
It is offering the same 7% rate as Progressive Building Society’s Rainy Day Saver. Unlike other regular savings accounts, this account allows withdrawals, but only one per day.
“This will be incredibly useful for savers who need quick access to their cash,” she added. However, the total monthly savings are capped at £300 per month, or £3,600 annually, so those with larger saving targets may need to look elsewhere, or consider opening separate accounts.
Principality Building Society is also offering a six-month fixed rate deal paying 7.5% AER/7.36% Gross. Savers can invest up to £200 per month, which means the pot can grow to a total of £1,200, and withdrawals are not permitted until the account matures.
For people who want more flexibility or would like to deposit higher lump sums, she said an easy access account would be a “great choice”.
“These accounts provide the most flexibility with deposits, but it’s vital to check any terms and conditions carefully,” she added.
“Saving little and often is wise to slowly build up a nest egg, and there are plenty of savings accounts on the market offering decent returns and can offer flexibility.
“It might seem daunting to find the most appropriate savings account, but the first step is to find a deal that can provide an inflation-busting return,” the savings expert concluded.