Regular savings accounts
Earn up to 7% on your savings
If you usually save little and often, regular savings accounts can offer top rates of up to 7% for feeding them every month – we've all the top picks in this guide, plus tricks to maximise interest.
What are regular savings accounts?
The clue's in the name. Most regular savings accounts require you to put money away each month with interest paid yearly (unless otherwise stated). They offer higher interest rates than traditional fixed or easy-access savings accounts, but tend to impose rigid terms and conditions, such as limiting the number of withdrawals you can make, forcing you to make a deposit every month and capping how much you can save. And the rate usually only lasts for a year.
Rather watch than read? This little video gives you the regular savings lowdown...
Seven regular savings need-to-knows
To help you make the most of a regular savings account, it's worth getting your head around the following need-to-knows...
This is crucial. Regular savers are for putting away specific amounts each month, and a few accounts are strict about this – fail to make the minimum deposit on time and you risk losing the interest or the provider closing your account.
While some regular savers let you skip the odd payment, try to avoid this if possible – you may not be allowed to make it up later, and you'd be sacrificing the interest.
If you've got a regular saver and can't make your normal payment, it's worth contacting your provider to discuss your options and see if it can help.
Most regular savers only last for a limited time – normally one or two years. After that, whatever you've saved is usually swept into a bog-standard account paying much less. So it's worth remembering to check for better rates after your regular saver ends.
Beware! Some regular savers have variable interest rates – here, the rate can change at the provider's whim, so keep an eye on it and be ready to switch away if it does.
Regular savers are for saving smaller amounts monthly. But if you've more to save, there's nothing stopping you from using more than one regular saver. For example, combine our three open-to-all top picks below and you could save £425/month – all earning 4.5% or more in interest.
Just be aware that you can usually only have one regular saver with each provider at any one time.
While regular savings accounts can pay higher rates of interest, 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.
- Put the lump sum in the top-paying easy-access account.
You'll then start earning interest on the full sum straightaway (see Top savings accounts).
Then, pay in to the regular saver from the easy-access 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 at any moment. Here's how it should work in practice...
Let's say you have £3,000 in savings. If you start by putting this in the top easy-access account with unlimited withdrawals and moving £250 across to a top regular saver in the first month, you'll have £2,750 earning the easy-access rate (for example, 2.92%), and £250 earning the higher regular saver rate (for example, 4.5%).
This way, you can keep getting interest on the lump sum while getting a higher rate on the money you pay in to the regular saver. After 12 monthly payments, the full amount will be in the regular saver. You can then move the whole lot to the top payer at the time and start the process again with a new regular saver (provided they're still around).
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.
Want to see how much you'll earn doing this dripfeeding technique? Find out with our Regular Savings Calculator. Simply plug in the rates on both accounts and it'll tell you how much interest you'll get in total.
- Put the lump sum in the top-paying easy-access account.
On regular savings, the interest you get will be about half the interest rate of the account. But don't worry, it's not a con – it's just how the maths works out. It's all down to the money being saved monthly rather than in one lump sum.
This has caused confusion and disappointment in the past, with some complaining that they've received less interest than they thought they would. Yet that's because they expected the wrong amount, not because they were underpaid. Here's an example (though for ease we've used an unrealistic interest rate)...
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 does Matt expect 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, halfway through the year he was earning it on £1,500.
How should Matt 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 about 10% of £1,500 over the year, which is £150.
It's also worth noting that all interest from regular savings accounts is now paid tax-free due to the personal savings allowance. Basic-rate taxpayers can earn £1,000 tax-free and higher-rate taxpayers £500. Additional-rate taxpayers get no allowance.
The protection you get here is the same as normal savings. Provided your money is in a UK-regulated bank or building society account, it's protected under the Financial Services Compensation Scheme. The golden rule is...
The first £85,000 per person, per financial institution is protected.
While that sounds simple, the details are more complex – there are specific rules involving how different banks are registered and what counts as a financial institution. For full info, read our 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.
But 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.
Children's regular savers
If you've a child aged 15 or under, you can get 5% AER fixed for a year with the Halifax Kids' Monthly Saver. However, you (or they) can only save between £10 and £100 a month. You must open the account online or in branch. For more on this and other kids' accounts, see our Kids' savings guide.
Help to Save for those on low incomes
The Government's Help to Save scheme is designed to encourage people claiming universal credit or working tax credit to save. If you qualify, you can deposit between £1 and £50 a month, and get a 50% bonus on the amount saved (up to a maximum bonus of £1,200 over four years).
Our Help to Save guide has full info on the scheme, including when you should and shouldn't go for it.
Top open-to-all accounts
The top open-to-all accounts match, or pay only slightly less than, some of the existing-customer accounts above. However, they typically let you save less per month, meaning less of your savings will get the higher interest rate – something which can have a big impact on your returns.
Principality Building Society's regular saver pays the top rate of 5%. The rate's fixed for a year, though you can only put in a low £125/month.
Alternatively, Halifax's regular saver pays 4.5% on monthly savings up to £250/month, and the rate's fixed for one year.
Not sure how much interest you'll get? Find out with our Regular Savings Calculator. Simply plug in the rates above, and how much you'll save, and it'll tell you how much you'll earn. The calculator also has a mode to show how much more you could earn dripfeeding cash into the regular saver from another account.
MoneySavingExpert.com is a national website serving England, Scotland, Wales and Northern Ireland. So we try to feature accounts open to everyone, which means you need to be able to open them online, by phone or by post.
Branch-based accounts are more difficult, as unless the account is offered by one of the big banks it's unlikely that everyone will be able to reach a branch. For example, someone in Carlisle couldn't access branch-based accounts offered by Suffolk Building Society as there isn't one close by.
It's always worth looking at local building societies and banks as they can occasionally have a corking branch-based account. But because we're a nationwide site, we can't feature them all.
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