Don't believe the best buy tables, it's possible to earn 8% interest on savings. Regular Saver accounts are a hidden species that pay big as long as you feed them every month.
This step-by-step guide includes all best-buy regular savers, plus tricks to help you maximise your interest.
In this guide
Best Buys:
What are regular savings accounts?
The clue's in the name. Regular Savings accounts require you to put money away each month. They offer blockbuster interest rates, but tend to impose rigid terms and conditions, like limiting the amount of withdrawals you can make, or forcing you to make a deposit every month.
How can they pay such huge interest rates?
Often these accounts only last a year, and there are strict limits on the amount you can save. Banks commonly use them as advertising tools, promising eye-catching interest rates, in order to grab your custom in the hope of flogging or forcing you to have their other products too.
Once it ends, your cash sweeps into a bog-standard account. Note the date, & ditch 'n' switch to a better deal immediately.
How does the interest work?
One point to note is that the interest received will be around half the interest rate of the account as the money is being saved monthly rather than in one lump sum. To maximise your overall interest use the dripfeeding technique below.
When are they worth using?
While for pure interest rates, the top regular savers are unbeatable, they are taxed, meaning basic rate taxpayers lose 20% of any interest earned, higher rate 40%. This means, for many, the returns won't be as good as putting the cash in a tax-free Cash ISA; plus, if you don't use your £5,340 (increased this year, read full details) ISA allowance in a tax-year, you lose it.
Thus usually the right strategy is first fill your ISA each year and once that's done plump for the best regular savers (for more info see the Where to Start Saving guide). Yet occasionally a regular savings account will pay so much, it can beat even the top untaxed ISA; the calculator below will help you compare.
How safe are your savings?
Bank collapse was once easy to dismiss, then the credit crunch and global market turmoil hit. The UK soon found itself bailing out Northern Rock, and the US authorities followed for even bigger bank Bear Stearns. This means these days every sensible saver should ask "is my money safe?.
The answer is quite simple. Provided your money is in a UK regulated bank or building society account, it's protected under the Financial Services Compensation Scheme (FSCS) and here's the golden rule.
The first £85,000 per person, per financial institution is guaranteed.
Sadly this is the simple face of savings safety; the exact rules are more complex involving how different banks are registered and what counts as a financial institution. For full info read the full Are My Savings Safe? guide.
How to maximise safety
With regular savers, often there's no problem at all. Limits on the amount you can deposit usually mean the balance of the account gets nowhere near £85,000 there's no problem.
Yet for regular savers which let you deposit more than that, or if you have savings in other accounts with the same bank, then in the unlikely event a bank or building society went bust, for total peace of mind don't put more than £85,000 in any one institution; spread it around.
For those with very large amounts of savings (for example a house sale) this could lead to lots of accounts, even if you've too much to stick to the £85,000 limit for each one, the general rule of not having all your eggs in one basket still works. For more info see the how to get 100% safety section of the savings safety guide.
This guide and best buys
It's impossible to pick "which bank is in trouble?", we've seen great names of world banking like Goldman Sachs and Merrill Lynch in trouble. Therefore the only solution for this site is that we'll report the top rates regardless, alongside explaining any 'protection oddities'. So far, world governments have reacted to protect their banks and no savers have lost money, and its likely (though not certain) that will continue.
Stay protected - keep updated on safety changesGet MoneySavingExpert's free, spam-free weekly email full of guides & loopholes
Top rate accounts (but need bank account)
The top paying regular savers come with a big 'but' attached - you must also hold or switch to the same bank's current account. Happily, at the moment there's a perfect harmony, with the two best current accounts for new switchers also offering the highest regular saver rates.
8% for First Direct customers No withdrawals or missed payments, save up to £300/mth
- Promo Rate: 8% AER fixed for 12mths.
- Monthly Deposit: £25 - £300
- Make withdrawals? No
- Miss a payment? No
- Access: Online & Phone
- Protection: Full £85,000 FSCS (see Safe Savings)
First Direct current account customers, with its 1st account, can get its Regular Saver, paying 8% AER fixed for a year. This allows deposits between £25 and £300 each month, via standing order from your First Direct bank account.
A big plus is that the First Direct* 1st account is one of our top picks; new customers get a £100 bonus, earned by depositing at least £1,500 a month, plus it's the outstanding customer service bank, with 93% voting it great. It pays no in-credit interest, and the overdraft rate is 15.9% - full info in the Best Bank Accounts guide.
With the regular saver, you can't miss any monthly deposits. though you can reduce payments to the minimum in any month. However, no withdrawals are allowed. If you do so before a year is up, the account will close and you'll get just 0.5% on all money saved. After a year, it'll revert to an account paying the same rubbish rate, so switch to a top payer then.
The maximum balance allowed increases monthly by £300, so if you only deposit £100 in month one, you could deposit £500 in month two (as the allowed max balance then will be £600). Technically, in the final month, you could deposit the full £3,600 minus the amounts you've already put in, though you'd miss a lot of the benefit this way as interest accrues daily on the balance at the time.
5% for Santander customersFixed for 13 months. Branch/phone only.
- Promo Rate: 5% AER fixed for 13mths.
- Monthly Deposit: £20 - £250
- Make withdrawals? No
- Miss a payment? No
- Access: Branch & Phone
- Protection: Full £85,000 FSCS (see Safe Savings)
The Santander Loyalty Fixed Rate Monthly Saver (issue 1) pays 5% AER for 13 months, and is available in branches or over the phone. To get one you must either be switching your current account to Santander or have had an account for at least 3 months, and paid in over £1,000 a month.
The good news is its Preferred Current Account* is one of our top picks. New customers get £100 for switching, plus 5% in-credit interest up to £2,500 and a 0% overdraft, both for the first year - after that it's 1% in-credit, and 50p/day for overdraft use. However, its customer service rate's poor. For full info and how this compares, see the Best Bank Accounts guide.
You can't make any withdrawals or miss any monthly deposits. Plus, the pay-in limits of £20 - £250 are strict; deposit less than £20 and interest will drop to 0.1% for that month, while pay in over £250 and you'll get just 0.1% for the rest of the time you hold the account.
4% for HSBC customersFixed for 12 months. Phone/branch
- Promo Rate: 4% AER fixed for 13mths.
- Monthly Deposit: £25 - £250
- Make withdrawals? No
- Miss a payment? No
- Access: Branch & Phone
- Protection: Full £85,000 FSCS (see Safe Savings)
The HSBC Regular Saver pays 4% AER if you have the normal Bank Account or Graduate Account, these are free to hold, though you must pay at least £500 a month into it.
If you have one if its fee-paying accounts you'll be eligible for an 8% AER regular saver. Not one of our top picks, but it's a good option if you're already a happy customer.
The Top open-to-all accounts
If you don't have the current accounts necessary to unlock the big paying accounts above, check out the top open-to- all accounts, that aren't linked to other products. There are no restrictions on how many regular savings accounts you can have and, as they all limit the amount of cash you can put away, you may want to use more than one.
Most flexible incl unlimited withdrawalsSaffron BS 4% AER fixed for 12 months. Branch & Post
- Promo Rate: 4% AER fixed for 12mths
- Monthly Deposit: £10 - £200
- Make withdrawals? Yes, unlimited
- Miss a payment? Yes
- Access: Branch & Post
- Protection: Full £85,000 FSCS (see Safe Savings)
The Saffron BS 12 month fixed rate regular saver (issue 2) pays 4% AER and lets you save between £10 and £200, but the real bonus here is that you can make unlimited withdrawals for no penalty.
The account can be opened and operated in branch or by post. The balance must remain above £10 or you will get 0.05% AER, though once the balance goes back over £10 the rate will revert to 4%. You get the interest once the year long fixed period is up.
Top online account, inc. 1 withdrawal Norwich & Peterborough BS 4% AER for 12 months
- Promo Rate: 4% AER fixed for 12mths.
- Monthly Deposit: £1 - £250
- Make withdrawals? Yes, 1 per year
- Miss a payment? No
- Access: Online only
- Protection: Full £85,000 FSCS (see Safe Savings)
The Norwich & Peterborough BS E-Regular Saver is available online and pays a fixed rate 4% AER for a year including 1.5% bonus. You can save between £1 and £250 each month and can make one withdrawal per year.
If you miss any payments or make more than one withdrawal you will lose the 1.5% bonus for the whole year, dropping the rate to a distinctly average 2.5% AER. The account can be opened and accessed online only.
6% if you've got childrenHalifax, great rate but max £100 monthly deposit
- Promo Rate: 6% AER fixed for 12mths.
- Monthly Deposit: £10 - £100
- Make withdrawals? No
- Miss a payment? Yes
- Access: Branch & Post
- Protection: Full £85,000 FSCS (see Safe Savings)
The Halifax Children's Regular Saver pays 6% gross interest fixed for a year, however you can only deposit a maximum of £100 per month. No withdrawals are allowed, but you can miss monthly deposits.
Please be aware applications can only be made in Halifax branches, this account is not available via the Bank of Scotland.
The account must be opened by an adult in the childs name. If, as is usual, your child doesn't earn enough to pay tax, it's tax free (a full explanation of children's account tax is in the Best Child Savings guide).
Local building societies often offer good rates too, so keep your eyes peeled in branches.
Don't believe the bad press
Sadly regular saver accounts often receive negative publicity due to a flawed understanding. Many people say they've used regular savers, but only received around half the interest they thought they would... yet that's because they expected the wrong amount, not because they were underpaid. Here's a wee example...
Mr Matt Mattics and his £3,000 savings
Matt has saved a total of £3,000 in a regular savings account paying 10% interest over a year, and is a non-taxpayer.
What Matt expects to earn? His simple sum works out that he's put £3,000 in at 10% therefore he should earn £300 in interest
Why is this wrong? Matt only had £3,000 in there for the last month; it took a year to build up to that amount. You only earn interest on money in the account. So after the first month he was earning the 10% on just £250, half way through the year he was earning it on £1,500 .
How Matt should work it out? Over the year, his average balance was roughly half the £3,000, in other words £1,500... so Matt should expect to earn around 10% of £1,500 over the year, which is £150.
Dripfeeding: How to maximise the interest
The problem with regular savings accounts is it takes time to build up the amount of money you have in there. So while they promise high interest, this is often just on a small amount of money. Yet if you have a lump sum of cash, and you want to maximise its earning, you can still take advantage
Put the lump sum in the top normal savings account
Put the lump sum you wish to save in a normal savings account paying as much interest as possible (see Top Savings Accounts).
Pay the money into the regular saver from the savings account Now make payments into the regular saver straight from your normal savings account each month, instead of from your current account. Not all savings account allow this, so do check before you set the account up (you may have to move the cash to a current account first, then to the regular saver.
This technique is called 'drip-feeding', as you're slowly moving your cash across, month by month. This means every penny you want to save is earning the most its can possibly do at any one moment. Here's how it should work in practice, lets take the same £3,000 savings as in the Mr. Matt Mattics example above...
| Month | Top savings account | Regular savings |
|---|---|---|
0 |
£3,000 |
£0 |
1 |
£2,750 |
£250 |
2 |
£2,500 |
£500 |
3 |
£2,250 |
£750 |
4 |
£2,000 |
£1,000 |
To get the maximum gain, put as much in as possible in the early months, but always ensure you've enough left to keep up the minimum payments for the account's lifespan. Then you've got as much interest as possible, while meeting the account's terms and conditions.
The Regular Savings Calculator
Below is a special calculator designed to help you work out what you'll earn from Regular Savings. It has two options...
Regular Savings Only. Choose this if you want to know how much you'll get from a Regular Saver alone.
Drip Feed Calculator. If you want to save a lump sum, and are using the drip feed route above, this will tell you how much you get, and compare it to keeping the money in your normal savings account.
For the most accurate answer use the AER (Annual Equivalent Rate) which should be listed on your statement. Do remember, most normal savings accounts are variable rates, so the drip feed calculation will change if the rate does – but it's a good indicator of the returns.
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