Saving money each month can feel like a mountain to climb, but there is a way to make that first step into saving easier.
Banks are offering attractive interest rates on regular savings accounts, which are designed to help you get into the savings habit.
Regular savers can be useful for anyone who would like to save little and often, as this type of savings account requires money to be deposited into the account each month. For example, the First Direct Regular Saver stipulates the customer must save between £25 and £300 a month (the standing order amount can change) - that’s up to £3,600 a year.
This would work well if you don’t have a lump sum ready to save, but would like to change your spending habits. If you manage to save each month, you could earn up to £136.50 with First Direct’s regular saver as it has a 7% interest rate. This is paid 12 months after the account is opened and the rate will remain fixed, so you’ll know how much interest you could earn if you keep up the regular payments.
However, if you close the account before the end of the 12 months, the interest rate drops drastically. This means that a regular savings account does come with some commitments, but if you can stick to its rules, the rewards will be worth it.
If you have a lump sum to put away, however, you can make a bit more money with a fixed-rate bond. Someone with £3,600 to put away in the top-paying one-year fixed-rate savings bond at the moment would make £155.52 in the same amount of time, for example.
Regular savers and fixed-rate bonds both discourage withdrawals, however - so if you think you might need to get hold of your cash with little notice in the next year, an easy access account could suit you better.
The regular saver from First Direct is for existing 1st Account customers only so it would require you to open a current account with First Direct if you aren’t already a customer. The good news is there is an offer to sweeten the deal.
We’ve teamed up with First Direct to offer our customers an exclusive switching offer*, which includes £175 and a £30 Amazon voucher when anyone is accepted for a First Direct current account. But the rewards don’t stop there, as you’ll then be able to access the regular saver which currently has the highest savings interest rate on the market.
Remember, before making any decisions with your money, compare the best savings accounts and take into account its interest rates as well as any specific terms and conditions to make sure you are getting the best possible deal.
Elsewhere, Natwest is offering a £200 switching offer for anyone that opens a Reward bank account. The account also comes with an attractive cashback offer and the opportunity to open a linked 6.17% regular savings account where you can save up to £150 a month.
NatWest’s Digital Regular Saver is for anyone that holds a NatWest current account and it requires a standing order to be set up each month, paying in between £1 and £150. This account does allow withdrawals at any time, but if you close your account you will not earn interest for the month of closure.
Nationwide’s Start to Save Issue 2 is also designed to help people to start saving and can be managed online via its website or banking app. It requires the customer to increase the balance by up to £50 each calendar month, so it’s perfect if you want to put away a small sum each month. The interest rate is 5% for 24 months, but it is variable so this means the rate could change during the term.
Overall, regular savers are a great way to change your spending habits as its rules encourage you to save money each month. Plus, with the bonus of top interest rates you’ll get extra money to add towards your savings goal.
*The Ts and Cs for this offer can be found here.
Saving for your dream can be tough; our savings guides will help you determine the fastest route to your savings target by maximising the potential of your nest egg along the way.
As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.