Another blow for savers as M&S Bank cuts its 5% rate – are regular savings still worth it?

Prior to today, M&S Bank had been the only bank left offering 5% AER on its regular savings account, after sister banks HSBC and First Direct cut their rates from 5% AER to 2.75% AER at the beginning of October.

Now it has followed the pack, and the rate on the M&S Monthly Saver for new accounts has been cut to 2.75%.

To open an M&S Monthly Saver, you must first have switched to its current account using the switch service, and have two active direct debits. You can then deposit between £25 and £250 a month in the regular saver for 12 months. If you don't pay in the max each month, you can pay more in later months.

Once the 12 months is up, the balance and interest is given to you as a lump sum, either back into your M&S current account or easy-access savings account. No withdrawals are allowed before the year is up.

See our Regular Savings and Top Savings Accounts guides for our top picks and full information.

I've already got an M&S Monthly Saver – will I see my rate cut?

No, if you signed up before today then you'll still receive 5% AER until your account matures, as rates are fixed for 12 months from opening.

At the end of the 12-month period, you'll need to check which rates are the most competitive. See our Savings guides for more information.

Despite the cut, regular savings accounts ARE still worth it.

If you currently have a regular saver, especially if it's one of the ones that still pay you 5% until the end of the fixed 12-month period (so HSBC, First Direct and M&S customers who already have a 5% account), then they offer rates far higher than any other type of savings accounts, though you're obviously still restricted to saving up to £250/month (£300/mth for First Direct).

If you're looking to save from your income each month then, even after the rate cuts, the regular saver will always win, provided its rate is higher than easy-access rates at the time, which is true right now.

Alternatively, if you save into a regular saver by moving money from other savings accounts with lower interest rates – a technique often called 'dripfeeding' – it's still worth getting a regular saver, provided it pays more than 2.25% (based on moving £250/mth). See our top pick regular savings accounts for the current best buys.

Overall, the regular saver is still worth a look for almost everyone, though it's not as clear cut as it once was. See our Is this the end of the regular saver? blog for more information.