Compare Regular Savings Deals
Regular Savings Ideas
Why we like it: Which? Recommended Savings Provider. No notice period. Deposit from £100 and then save regularly with no minimum. Interest paid monthly or annually. Apply in minutes. Your eligible deposits with RCI Bank UK Limited are protected up to a total of £85,000 by the Financial Services. Compensation Scheme (FSCS)
What is a Regular Saver Account?
A Regular Savings Account is a type of savings account offered by many UK banks and building societies.
Designed to encourage the habit of regular saving, these accounts reward your commitment to save a fixed amount every month with typically higher interest rates than traditional savings accounts.
This way, not only are you building up your savings, but you're also earning more on the money you save.
Importance of Regular Savings
Establishing a regular saving habit is critical for several reasons.
Firstly, it provides a financial cushion for unexpected expenses or emergencies.
Additionally, it helps in achieving long-term financial goals such as buying a house, funding education, or planning for retirement.
Lastly, regular saving enables you to take advantage of the power of compound interest, maximising the growth of your savings over time.
Who Can Benefit from a Regular Saver Account?
Just about anyone can reap the benefits of a regular saver account, especially if you're:
- Looking to kickstart a regular saving habit
- Seeking higher interest rates than most standard savings accounts
- Comfortable with saving a set amount each month
Regular saver accounts, with their inherent structure, are an excellent tool for promoting financial discipline and maximising returns from your savings.
Features and Benefits of Regular Savings Accounts
Regular saver accounts are a compelling option for savers, chiefly due to their attractive interest rates. In many cases, these accounts offer rates higher than standard savings or current accounts. This makes regular saver accounts a favourable vehicle for growing your savings faster.
But remember, these high rates often come with conditions, such as making regular monthly deposits and limiting withdrawals.
Encouragement to Save Regularly
The core of a regular saver account is fostering a consistent saving habit.
These accounts typically require a fixed monthly deposit, instilling a sense of financial discipline.
By setting up a standing order from your current account, you're consistently saving without even thinking about it. It's a simple and effective way to see your savings pot grow.
Flexibility and Accessibility
Although these accounts require regular contributions, they often provide a degree of flexibility.
Depending on the terms of your account, you might be able to vary the amount you deposit each month (within a pre-determined range).
Moreover, while withdrawals are usually limited to encourage saving, you can generally access your money if need be, albeit potentially sacrificing some interest.
Potential Bonuses and Perks
Some regular savings accounts also come with additional perks.
Bonuses, such as loyalty rates for existing customers, are not uncommon.
Plus, in some cases, the interest earned can be tax-free, especially if the account is held within a Cash ISA.
How Regular Saver Accounts Work
Once you're familiar with the features and benefits of regular saver accounts, it's essential to understand how they operate. This section breaks down the process from account opening to the end of the term.
Opening a Regular Saver Account
Opening a regular saver account is typically straightforward.
Most banks and building societies in the UK offer these accounts, and the process is usually as simple as applying online or visiting a local branch.
Be prepared to provide some standard identification and proof of address, and have your National Insurance number at hand.
It's worth noting that some financial institutions may require you to hold a current account with them to be eligible for their regular saver account. Be sure to check this condition before you apply.
Read our full guide on how to open a savings account.
Once your account is open, it's time to start saving! You'll agree on a fixed amount to deposit each month, which can typically range from £10 to £500.
This amount is then transferred into your regular saver account each month via standing order.
It's essential to maintain these deposits, as missing a payment could result in a loss of interest.
Withdrawal Rules and Penalties
Regular saver accounts are designed to encourage saving, which is why many have rules around withdrawals.
In some cases, withdrawals aren't permitted at all. In others, you can make withdrawals, but there may be a penalty, such as a lower interest rate or loss of interest on the amount withdrawn.
Always review these rules before opening an account to ensure it aligns with your saving habits and goals.
End of Term Procedures
Regular saver accounts typically have a fixed term, usually 12 months. At the end of the term, your account will often be converted into a standard savings or current account, and your funds, along with the accrued interest, will be transferred into this new account.
It's a good idea to review your options at this stage, as you might find a different account type or another regular saver account more beneficial.
Comparison: Regular Saver Accounts vs Other UK Savings Accounts
Understanding how regular saver accounts stack up against other savings options can help you determine the best fit for your financial goals.
Let's take a closer look at how these accounts compare.
Regular Saver Accounts vs Instant Access Savings Accounts
While the flexibility is a clear advantage, the interest rates are generally lower than regular saver accounts.
If you can commit to saving a fixed amount each month and aren't likely to need access to your savings, a regular saver account could offer you higher returns.
Regular Saver Accounts vs Fixed Rate Bonds
Fixed Rate Bonds often offer higher interest rates and are a good option for those with a lump sum to invest.
However, the money is typically locked away for a set term, and early withdrawals often incur a penalty.
On the other hand, regular saver accounts require monthly deposits and may offer more flexibility regarding access to your funds.
Regular Saver Accounts vs Cash ISAs
A Cash ISA (Individual Savings Account) offers tax-free interest on savings up to a certain limit each year.
If you're likely to earn more interest than the Personal Savings Allowance (PSA), a Cash ISA might be a wise choice.
Remember that regular saver accounts can also be tax-efficient if held within a Cash ISA.
Regular Saver Accounts vs Notice Savings Accounts
Notice Savings Accounts require you to give a set amount of notice before making a withdrawal.
The notice period could range from 30 to 120 days, depending on the account.
This lack of immediate access to your funds can deter impulse spending.
However, a regular saver account might be a better fit if you're seeking to build a saving habit with potentially higher interest rates.
Tips for Maximising the Benefits of Regular Saver Accounts
Having familiarised ourselves with regular saver accounts, their features, how they work, and their comparison with other savings options, let's now delve into some practical tips to maximise the benefits of these accounts.
Understand Your Financial Goals
First and foremost, have a clear understanding of your financial goals.
Are you saving for a short-term goal like a holiday, or are you setting aside money for your future retirement?
The nature of your savings goal can help determine whether a regular saver account is the right fit for you.
Maintain Consistent Monthly Deposits
Remember, regular saver accounts require you to make consistent monthly deposits.
Set up a standing order from your current account to ensure that you don't forget your monthly savings commitment.
A regular and disciplined approach to saving can reap substantial rewards over time.
Consider the T&Cs Before Withdrawing
Before making any withdrawals, make sure you fully understand the terms and conditions.
Some regular saver accounts penalise you for withdrawing money before the end of the term, so only withdraw funds if it's necessary.
Review Your Account at the End of the Term
When your account term ends (usually after 12 months), your account is likely to be converted into a different type of savings account.
This is a good opportunity to review your financial goals and decide the best course of action.
You could start a new regular saver account, switch to a different type of savings account, or even consider other investment options.
Frequently Asked Questions About Regular Saver Accounts
To round off our comprehensive guide, let's address some frequently asked questions about regular saver accounts in the UK.
Can I Open More Than One Regular Saver Account?
Yes, you can open regular saver accounts with different banks. However, some banks require you to hold a current account with them to open a regular saver account, so you'll need to check the terms and conditions.
What Happens If I Miss a Monthly Deposit?
Missing a monthly deposit can result in a penalty, often in the form of a reduced interest rate. It's important to set up a standing order to ensure you don't miss any payments.
Can I Withdraw Money from My Regular Saver Account?
Withdrawal rules vary by bank. Some banks allow withdrawals but may reduce your interest rate as a penalty. Others may not permit withdrawals at all. It's crucial to understand these rules before opening an account.
What Happens at the End of the Term?
At the end of the term (usually 12 months), your regular saver account will likely be converted into a different type of savings account. Your balance and the accrued interest will be transferred to this new account.
Finding the best regular savings accounts
Earn Up to 0.40% Interest On Your Savings
If you take out a RCI Freedom Saver Account, you can benefit from an attractive 0.40% AER fixed interest. The minimum deposit is £100 and then you can save on a regular basis with no minimum.
Features of the RCI Freedom Saver Account include:
- After your initial deposit you can save from just £1 per month
- Interest is calculated daily and paid monthly or annually
- You can make unlimited deposits and withdrawals
- Your eligible deposits with RCI Bank UK Limited are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS)
- RCI Bank is a Which? Recommended Savings Provider