Regular Savings Accounts in UK Banks

- by Elizabeth Redfern
The History Of The Leading UK Banks – Chapter Twenty Six

If you are looking for a regular saver account, but you can’t make heads or tails of the features of each loan, you are not alone. Cashfloat.co.uk, a payday loan lender, present this useful guide to different regular savings accounts on offer from various UK banks.

All of the UK banks are offering some regular saver account so it can be useful to take a look and see which one offers the best deal. Regular savings accounts are usually the best option for little sum investments.

Which regular savings accounts are best?

Best Regular Saver

How Regular Savings Accounts Work

As you might expect from the name, a regular savings account must be fed by monthly contributions and in return for this commitment, you get a better rate of interest than that offered on an instant access account.

Most regular savings accounts impose restrictions on withdrawals as well as demanding a minimum level of contribution per month. Also, most of the accounts will only last for one year, and there are limits to the amount you can deposit. UK banks will often advertise this kind of account to attract new customers. While they do give you a nice booster cash advance for a year, the best way to make more money out of savings accounts is to switch your account each year. Some of the Regular Savings Accounts are linked to other products so you may need to change your current account to the new bank to benefit from the better rate of interest.

regular saver account - cashfloat

Interest On Regular Saver Accounts

The new personal savings allowance introduced in April 2016 means that a basic rate taxpayer can earn up to £1,000 in interest without paying tax. Those who are higher rate taxpayers can get £500 interest tax-free. For most people, this means that they are no longer in the tax paying bracket for interest on savings but if you do exceed your limit the amount due is taken back using your tax code.

However, it is important to understand that the amount of interest you receive will be around half as you are investing a smaller sum each month and the capital is not being invested in a lump sum. Investing in a regular savings account is a useful way of topping up other kinds of investments like an ISA or any other high-interest rate account.

Keeping Your Savings Secure


With the near collapse of Northern Rock and Lloyds, many people are worried about how safe the UK banks are. If you are investing in a UK bank, then your savings are covered by the Financial Services Compensation Scheme which covers up to £75,000 per person. So, as long as your regular saver account does not go over that amount, the funds will be safe.

One piece of good advice is to restrict the amount you invest in any one bank to the sum of £75,000. But as there are very strict limits for regular savings accounts, this should not be a problem.

Compare Rates For Regular Savings Accounts With Leading UK Banks

Open To All Regular Savings Accounts

Most of the regular savings accounts that do not link to other products that are on offer by smaller UK banks and building societies. Leeds Building Society offers customers a rate of 3.05% and this one has no fixed term so you can keep it open as long as you want. Deposits are the usual limits of £50 to £250 per month, and a missed payment reduces the rate to 1.25%. However, you can make one withdrawal per year and still get the bonus rate. This account is a variable rate account, so it is vital to monitor it closely.

Maximising The Amount Of Interest On A Regular Saver

Although the interest rate on regular saver accounts is advertised to be high, there is often a misunderstanding by customers of how this accrues. One important factor to remember is that it will take some time to build up the lump sum so, for instance, if you plan to invest £3,000 in a one year account, you must acknowledge that the full amount will only be there for the last month of the account.

I'm 36 but I still feel like a little kid with £200 in my savings account! Click To Tweet

One way to get the best from your money is to put the lump sum into a high paying current account and drip-feed it into the regular saver. Subscribing the full limit each month will earn you better interest as long as you do not miss any payments. The interest you earn should build up quite substantially. And when your savigns account is large enough you can avoid taking out personal loans.

Which Banks Come Top Of The Table For Regular Savings?

best saver accounts - cashfloat

If you are looking for somewhere safe to invest on a regular basis then HSBC, First Direct and Marks & Spencer give the best rates for regular savings accounts. They offer these accounts on the basis that you switch your current account to the bank. Check terms and conditions before you change to make sure that you will not worse off in the long term.

For customers who do not want to change current accounts, the best option looks like Leeds Building Society.

One final point to remember is that you must always monitor your regular savings account as at the end of the term the funds will almost certainly go into a very low rate account. When this happens, you know that it is time to move your money elsewhere and secure the best interest rate possible. You don’t want to be relying on your savings accumulating only to find out that they weren’t when you need them desperately, leaving you needing a short term loan instead.

Conclusion

The leading UK banks are anxious to get hold of your custom, and this is why they offer the higher rates for regular saver accounts. Make sure that their terms and conditions for current accounts do not outweigh the benefits on offer and you can begin to reap the rewards of regular savings.

best saver accounts - cashfloat
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About The Author
Elizabeth Redfern
Elizabeth Redfern is a born and bred Londoner who loves the city life. She is a proud chocoholic who enjoys reading, jogging and eating - especially chocolate! Elizabeth attained a first class degree in Mathematics but chose to make a career out of her real passion, writing. She has published many poems and short stories, but decided to join the Cashfloat educational channel writing team because she is passionate about helping people take care of their finances leaving them free to enjoy the finer points of life - most notably (in her opinion), chocolate!
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