Bank offers market-leading 7% interest rate on regular savings

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Telephone and digital-based bank first direct is currently offering savers the highest returns on the regular savings market with an Annual Equivalent Rate (AER) of seven percent. The rate is fixed for 12 months and Britons can get started with just £25.

Rachel Springall, finance expert at Moneyfacts, said: “Interest rates on variable savings accounts are continuing to rise, as several providers have improved their offers since the start of 2023. The influence of the Bank of England Base Rate rises, along with rate competition, has made a positive impact on variable rate savings accounts.

“Challenger banks and building societies continue to take the most prominent positions in the top rate tables, so savers who fail to review their existing accounts to the latest top rates may miss out.”

Regular savings accounts can be a good option for those wanting to get into a savings habit, as these accounts typically offer higher interest rates and the terms generally encourage savers to pay money into the accounts monthly.

Savers just need to meet certain requirements on the respective accounts and they’ll earn interest on their savings on the basis they make minimal withdrawals and deposit regularly.

Savers opting to invest with first direct, which is an online-based retail bank division of HSBC, are being afforded a seven percent AER on up to £3,600 per year.

Interest is calculated daily and paid on maturity of the account exactly one year after opening. Savers can deposit between £25 and £300 per month in multiples of £5.

Withdrawals are not permitted throughout the duration of the 12-month term. In the event of this, the account will have to close and interest will be paid up to the closure date at the Savings Account variable rate instead.

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The savings account is currently only available to Current Account holders, but those who switch banks will be awarded a free £175 if they use the Current Account Switching Service (CASS) and deposit £1,000 within three months of opening.

The first direct Regular Saver Account tops the leaderboard with the highest returns by a stretch, however, Lloyds isn’t too far behind.

Ranking top of the list is Lloyds Bank’s Club Lloyds Monthly Saver with an AER of 5.25 percent.

A £25 deposit is required to open this account and the term runs for 12 months, which means up to £4,800 can be invested over the course of the year.

The account is available to Club Lloyds customers and unlimited withdrawals are permitted without penalty. The interest rate is fixed and will be paid on the anniversary of the account opening, and deposits between £25 and £400 must be invested before the 25th of every month.

NatWest’s Digital Regular Saver falls just behind with an AER of 5.12 percent.

The 5.12 percent interest rate is awarded to savings up to £5,000, after which a 0.65 percent rate will be awarded to figures from £5,001 and over.

There is no minimum deposit required to open the account and it allows people to save up to £150 each month. Unlimited withdrawals are permitted without penalty and interest is awarded monthly.

The Royal Bank of Scotland’s Digital Regular Saver is also offering an AER of 5.12 percent.

Like NatWest, the same interest rules apply to this bank account (5.12 percent paid up to £5,000, then 0.65 percent). Interest is applied monthly, and unlimited withdrawals are also permitted.

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