Saving anything during these difficult times can feel like a real challenge, but if you are able to commit to putting even a small amount away each month, you could earn returns as high as 7%.

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First Direct has just doubled the rate on its Regular Saver account from 3.50% to 7%, the highest rate it’s been for nearly a decade.
However, the account can only be opened by customers who already have the bank’s 1st current account. If you aren’t First Direct current account holder, but want to switch to the bank, there’s a £175 switching incentive up for grabs provided you use the Current Account Switching Service to transfer across.

The small print

The Regular Saver Account, which has a one-year term, requires account holders to pay in between £25 and £300 a month, which means the total you can deposit over the 12-month period is £3,600. If you pay in the maximum each month, you’d end up with over £139 in interest after a year, assuming the interest rate remains at 7%. However this type of account won’t be right for you if you need to take money out, as withdrawals aren’t allowed during the 12 month term. The account can also only be opened online or via the mobile app, but after that you can manage it over the telephone if you want to.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Regular savings accounts are more rigid than easy access accounts, and harsh penalties can be applied if payments are missed or withdrawals are made, so they are most suitable for savers who need a strict savings plan and who wish to avoid dipping into their cash early.”

Other regular saver best buys

Other competitive regular savings accounts include NatWest and RBS’s Digital Regular Saver accounts, which each pay 5.12% annual interest before tax. Again, you must hold either a NatWest or RBS current account to be eligible to apply. The 5.12% interest rate is only payable on the first £1,000 held in the account. Once you have a balance over this amount, the rate falls to 1% on amounts between £1,001 and £5,000 and 0.50% on amounts over £5,000. You can only pay a maximum of £150 a month into either of these accounts, but you can make withdrawals whenever you want.

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Alternatively, if you’re keen to save towards a particular goal, for example, next Christmas, Principality Building Society is offering a Christmas 2023 Regular Bond paying 5%. You can open this account with as little as £1, and the maximum you can pay in each month is £125, but you don’t have to pay something in every month if you don’t want to. You don’t need to have a current account with the building society to apply. You can’t make any withdrawals from this account during its one-year term.

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If you think a regular savings account might be a bit restrictive for you, then you may be better off with an easy access account. This time last year the best easy access account available was paying 0.75%, whereas today you can earn 2.85% from Coventry’s Limited Access Saver account, which enables you to make up to six penalty-free withdrawals a year. Again, this account can be opened with just £1.

Anna Bowes, founder of savings website Savingschampion.co.uk, said: “Although we are anticipating another base rate increase later this month, the expectation is that we are now nearing the top of the interest rate cycle. But, considering we are waiting for the base rate to rise further, it has been disappointing to see a general slowdown in competition, even between the variable rate accounts. However, as we have come to expect, there have been some bright sparks that have appeared briefly – and we’re hoping for more as we approach the end of the year.”

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