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Believe it or not, it's possible to earn 5% interest on savings tax-free. Regular savings accounts are a hidden species that pay big if you feed them every month – we've all the best buys in this guide, plus tricks to maximise your interest.
Top Savings Accounts: Find the best-buy easy-access and fixed-rate deals
Top Cash ISAs: Save in a permanently tax-free account
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, such as 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 limit the amount you can save. Banks commonly use them as advertising tools, promising eye-catching interest rates to grab your custom – many of them are linked accounts, meaning to get them, you need to have the bank's current account too.
Once it ends, your cash usually sweeps into a bog-standard account – so ditch 'n' switch to a better deal.
How does the interest work?
All interest from regular savings accounts is now paid tax free due to the personal saving allowance. Basic-rate taxpayers can earn £1,000 tax-free and higher-rate taxpayers £500. Additional-rate taxpayers get no allowance.
On regular savings 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 drip-feeding technique below.
When are they worth using?
As ISA rates have dropped and all savings interest is now paid tax free, start by filling your high-interest current account(s) up to the limit (the top ones pay up to 5% interest), then trickle your money into regular savings (for more info, see the Where to Start Saving guide).
Rather watch than read? This helpful little video gives you the regular savings lowdown...
How safe are your savings?
After the calamities that hit several big banks such as Northern Rock, RBS and the Lloyds group, every saver should ask: "Is my money safe?" The answer is simple. Provided your money is in a UK-regulated bank or building society account, it's protected under the Financial Services Compensation Scheme (FSCS). Here's the golden rule.
The first £85,000 per person, per financial institution is guaranteed.
For full info, read the full Are My Savings Safe? guide.
How to maximise safety
With most regular savers, limits on the amount you can deposit mean the balance gets nowhere near £85,000, so 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, don't put more than £85,000 in any one institution – spread it around. See how to get 100% safety.
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Top-rate linked accounts
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 many of the top current accounts for new switchers also offer the highest regular saver rates.
Get 5% if you have (or switch to) its 1st account – no.1 for customer service + Expedia voucher or gadget for switching
First Direct
If you have a First Direct 1st account, you can get its regular saver, paying 5% AER fixed for a year on up to £300/mth. The 1st account is one of our top picks – new customers switching to it get a choice of a £150 Expedia voucher, a gadget such as Bose headphones or a Fitbit, or an online self-development course. Plus, First Direct has won every bank service poll we've ever done, with 91% of its customers rating it 'great'.
Need-to-knows
- You can deposit between £25 and £300 each month. If your deposit's less than £300 in any month, you can carry over the remaining allowance to the following months.
- You must make deposits by standing order from your First Direct bank account.
- If you miss a payment, or make a withdrawal, First Direct will close your account, and you'll get 0.05% interest instead.
- If you already have a First Direct current account, you can open its regular saver by clicking on the apply button on the linked page, or by calling First Direct.
- First Direct shares its £85,000 UK savings safety guarantee with HSBC.
- You'd earn £96.77 interest (gross) if you saved the max for 12 months with this account.
Get 5% if you've switched to M&S Bank – which offers a £125 gift card + £5/mth for a year
M&S Bank
If you've switched to M&S Bank's current account, you can get access to its regular saver paying 5% AER fixed for a year. This account's one of our top picks as you get a £125 M&S gift card for switching, plus a £100 0% overdraft – good if you occasionally dip in and out of the red.
Need-to-knows
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You must deposit between £25 and £250 each month. If your deposit's less than £250 in any month, you can carry over the remaining allowance to the following months.
- You must have two active direct debits on your current account, and must have switched to it using M&S's current account switching service.
- You must make deposits by standing order from your M&S current account.
- To get the regular saver, you'll need to call M&S Bank on 0345 900 0900 or apply in branch.
- If you need access to your cash, you can close the account early, but you'll only earn 0.35% interest, not 5%. You can't make withdrawals from the account.
- M&S Bank has the full £85,000 UK savings safety guarantee.
- You'd earn £80.64 interest (gross) if you saved the max for 12 months with this account.
Decent 5% rate for Nationwide main current account customers
Nationwide
If you have a Nationwide current account, or get one, you'll be eligible for the Flex Regular Online Saver, paying 5% AER on up to £250/mth. The account's got a term of 12 months, but the rate's variable so could drop in that time – keep an eye on it and move away if it does.
You can get it with the FlexDirect or FlexPlus accounts, among others, both of which are best buys – for example, the FlexDirect pays 5% interest on up to £2,500 of savings.
- The Nationwide Flex Regular Online Saver has a high maximum pay-in of £250/mth allowing you to save up to £3,000 a year. Open it via internet or mobile banking, or in branch.
- You can deposit between £1 and £250 each month. You can miss months, but you can't make up the amount in the following months.
- You can make unlimited withdrawals from the account. If you do take cash out, you can pay back in during the same month provided your net increase isn't more than £250.
- You need to have, or open, a FlexPlus or FlexDirect account to get this. Alternatively, you can open a FlexAccount or FlexOne (over-18s) and switch to it, or open one of these and pay in £750+ per month for three months. See Best Bank Accounts for our top picks.
- The rate on this account is variable, so keep an eye on the rate, especially in light of recent base rate cuts.
- After a year the account will change to a Saver Account. Make sure you diarise the end date, check the rate and transfer your savings to a higher payer if necessary.
- You can only have one regular saver open with Nationwide at a time.
- Nationwide Building Society has the full £85,000 UK savings safety guarantee.
- You'd earn £80.64 interest (gross) if you saved the max for 12 months with this account – assuming the variable interest rate doesn't change.
Get 5% if you've Santander 123 – which offers up to 3% cashback on bills
Santander
If you've a Santander 123 or 123 Lite current account, or 123 credit card, you can apply for its regular saver paying 5% AER fixed for a year on up to £200/mth. You can also apply for this account if you've £75,000+ worth of investments with Santander or have a large mortgage with it.
Need-to-knows
- To qualify as a Santander World customer, you must have any Santander 123 current account or the 123 credit card.
- You can also apply for this account if you're a Santander Select customer with £75,000+ in Santander investments or if you have a £500,000+ Santander mortgage.
- You must fund the account by standing order from your Santander current account and be signed up for online or mobile banking.
- If you aren't a Santander World or Select customer you'll be eligible for a lower 3% AER regular saver.
- You can deposit up to £200 each month, and there's no penalty if you miss a month. If your deposit's less than £200 in any month, you can't carry over the allowance in subsequent months.
- You can make withdrawals but you can't replace money taken out without reducing your £200 monthly allowance.
- Santander shares its £85,000 UK savings safety guarantee with Cahoot.
- You'd earn £64.52 interest (gross) if you saved the max for 12 months with this account.
Get 5% if you have (or switch to) HSBC Advance or Premier
HSBC
If you have the HSBC Advance Account or Premier Account, you can get its regular saver paying 5% AER fixed for a year on up to £250/mth. Plus, if you switch to its Advance account, you can get up to £200 if you stay for a year.
Need-to-knows
- You can deposit between £25 and £250 each month. If your deposit's less than £250 in any month, you can carry over the remaining allowance into following months.
- If you already have the Advance or Premier account, just log in to internet banking and apply for the regular saver, or book a branch appointment to open one.
- If you have (or get) the HSBC Bank Account or Graduate Account you'll be eligible for a slightly lower 3% regular saver. These accounts are free to hold, though you must pay in at least £500 a month to the Bank Account.
- You must make deposits by standing order from your HSBC bank account.
- If you miss a payment, or make a withdrawal, HSBC will close your account, and you'll get 0.05% interest instead.
- HSBC shares its £85,000 UK savings safety guarantee with First Direct.
- You'd earn £80.64 interest (gross) if you saved the max for 12 months with this account.
'Best of the rest' linked accounts
A few other bank accounts have linked regular savers, though they pay less than the 5% accounts above. All accounts below have £85,000 UK savings safety guarantee.
| Provider | Interest Rate | Min/Max Deposit per month | How to Open | Withdrawal Restrictions | Other information |
|---|---|---|---|---|---|
| Club Lloyds Monthly Saver | 3% AER fixed for 12 months | £25/£400 (1) | Online/phone/branch | None | Must have a Club Lloyds account |
| Bank of Scotland Monthly Saver | 2.5% AER fixed for 12 months | £25/£250 (1) | Online/phone/branch | None | Must have a Bank of Scotland current account |
| TSB Monthly Saver | 2% AER fixed for 12 months | £25/£250 (2) | Online | None | Must have a TSB current account |
| (1) Can miss payments, but payments below £25 will be returned. You can only make one deposit per month by standing order, which must arrive by 25th. (2) Can miss payments, but payments below £25 will be returned. You can only make one deposit per month | |||||
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. These accounts are increasingly rare, and tend to be offered by small, local building societies as branch-based accounts. Check if there's a decent account near you.
Get 4.5% if you've children – though you can only save £100 a month
Halifax Kids' Regular Saver
The Halifax Kids' Regular Saver pays a 4.5% gross interest fixed for a year, but you're limited in the amount you can save – plus, you must open the account for the benefit of your child, who must be aged 15 or under.
Need-to-knows
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You can deposit between £10 and £100 each month. There's no penalty if you miss a payment in any month.
- You're not allowed to make withdrawals unless you're closing the account.
- The account must be opened by an adult in the child's name. Your child usually won't have to pay tax (see a full explanation of tax on kids' savings).
- Applications can be made online or in Halifax branches, but the account can only be managed in branch.
- Halifax shares its £85,000 UK savings safety guarantee with Bank of Scotland, (some) AA Savings, Saga & Birmingham Midshires.
- You'd earn £29.05 interest (gross) if you saved the max for 12 months with this account.
Good 3% rate with unltd withdrawals, but you must open in branch
Virgin Money Regular Saver
The Virgin Money Regular Saver pays 3% AER fixed until 1 September 2019. It allows unlimited penalty-free withdrawals and you can save up to £250/mth.
To open this account, you must visit a Virgin Money branch. Find your nearest.
Need-to-knows
- You can deposit between £1 and £250 each month. There's no penalty if you miss a payment in any month.
- You can make unlimited withdrawals from this account without penalty.
- You must open and manage the account in branch.
- Virgin Money has the full £85,000 UK savings safety guarantee.
- You'd earn £48 interest (gross) if you saved the max for 12 months with this account.
Decent 2.5% rate though you can't make withdrawals during the term
Halifax Regular Saver
The Halifax Regular Saver pays 2.5% AER interest fixed for a year, but you can't make any withdrawals during the term unless you're closing the account. You can save £25-£250 a month by standing order, which must reach your account by the 25th of the month.
Need-to-knows
- You can only hold one Halifax Regular Saver.
- Halifax will open an Everyday Saver account alongside your Regular Saver to pay your money into at the end of the term.
- Halifax shares its £85,000 UK savings safety guarantee with Bank of Scotland, (some) AA Savings, Saga & Birmingham Midshires.
- You'd earn £40.47 interest (gross) if you saved the max for 12 months with this account.
Local building societies
Local building societies often offer good rates too on branch-only accounts, so keep your eyes peeled if you're visiting or walking past. We've listed a few of the top accounts below, but they're only available if you live near a branch.
South and east England
If you live near a Saffron Building Society branch, you could get its 12-month fixed-rate regular saver. It pays 3.5% AER for 12 months, provided you deposit between £10 and £200 every month. You must open the account in a branch, and these are located in Essex, Hertfordshire and Suffolk. You can check if you live near a branch here. You can also apply by post if you're already a Saffron customer.
Kent Reliance's regular saver pays 3% AER when you deposit between £25 and £500 every month. The account must be opened in one of its nine branches, which are all in Kent, West Sussex and Hampshire.
Ipswich Building Society offers 2.85% AER to residents in selected postcodes near Ipswich, though this rate includes a one year fixed bonus of 2.5% payable when 11 payments have been paid into the account.
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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 an 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.
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.
Drip-feeding: How to maximise the interest
While regular savings account can pay up to 5%, the problem with them is that it takes time to build up the amount of money you have in there. Yet if you have a lump sum of cash, and you want to maximise its earnings, you can still take advantage.
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Put the lump sum in the top paying current account
Some current accounts pay higher interest than normal easy-access savings accounts, so put the lump sum you wish to save in one of these high interest current accounts (see Top interest-paying current accounts).
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Pay the money into the regular saver from the current account Now make payments into the regular saver straight from your high interest current account each month. The key is to put as much as you can (up to the monthly limit) into the regular savings account to max the interest.
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 it can possibly do at any one moment. Here's how it should work in practice. Let's take the same £3,000 savings as in the Mr Matt Mattics example above...
How to drip-feed £3,000 into regular savings
| Month | Top current 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 assumes your savings are covered by the relevant PSA for your tax rate.
The calculator has two options...
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Regular savings only. Choose this if you want to know how much you'll get from a regular saver alone.
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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 with keeping the money in your normal savings account.
The Regular Savings Calculator Pick your question
Your Result
After saving {{ vm.resultMonthly | currency : "£" }} a month for {{ vm.resultMonths }}, you will have {{ vm.resultTotalText | currency : "£" }} in savings, meaning you've earned {{ vm.resultInterest | currency : "£" }} interest
Your Result
After {{ vm.resultDripfeed5 }} months your normal savings account was empty and the drip feeding stopped. The interest up to that point was... After drip-feeding the cash for {{ vm.resultDripfeed6 }} months...
Total interest earned: {{ vm.resultDripfeed1 | currency : "£" : 0 }}
{{ vm.resultDripfeed2 | currency : "£" : 0 }} from the normal savings & {{ vm.resultDripfeed3 | currency : "£" : 0 }} in the regular saver.
If you'd kept the money only in the normal savings account you'd have earned {{ vm.resultDripfeed4 | currency : "£" : 0 }} in interest.
For the most accurate answer, use the AER (Annual Equivalent Rate) which should be listed on your statement. 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.
Regular savings vs ISAs
Will my regular saver beat an ISA?To beat this, your Regular Saver must pay at least...
{{rs.mrate}}% if interest is covered by personal allowance, {{rs.basicResult | number:1}}% if you'll pay basic-rate tax on interest or {{rs.higherResult | number:1}}% if you'll pay higher-rate tax.