Digital bank Zopa is offering savers a competitive interest rate on its regular savings account with a bumper 7.10% AER.
Regular savings accounts are designed for people who want to save a fixed amount each month over a set term, typically 12 months, and earn a higher interest rate than standard savings accounts in return. The account allows savers to deposit up to £300 each month, with a total maximum deposit of £3,600 over 12 months. At this rate, a full £3,600 deposit would earn around an estimated £137 in interest, bringing the total balance to roughly £3,737 at the term’s end.
There is no minimum deposit needed to open the Regular Saver account, but customers must have a Zopa bank account and a Smart Saver account first, the latter requiring a minimum deposit of just £1.
After the 12-month term, the account automatically converts to an easy access account with a 3.5% rate, although customers can open a new regular saver to continue earning the higher rate.
Unlike many other regular savings accounts, Zopa’s saver permits withdrawals at any time without penalty. However, any money withdrawn can only be replaced up to the monthly limit of £300. For example, if you withdraw £500, you can only redeposit £300 within that month.
To open this account, applicants must be 18 or over, UK residents, and have both the Zopa bank and Smart Saver accounts.
What else is out there?
Savers can still benefit from higher interest rates despite the Bank of England’s latest Base Rate cut to 4%.
Principality Building Society is still topping the table for regular savers with an Annual Equivalent Rate (AER) of 7.5%. The account runs for six months, and interest is paid on maturity.
Savers can invest up to £200 per month, which means the pot can grow to a total of £1,200, and withdrawals are not permitted until the account matures.
With a maximum monthly investment of £200, savers will end up with £1,227.53, including £27.53 in interest. So, while it may have a market-leading AER, its six-month term limits the total interest earned.
First Direct offers a competitive 7% AER over 12 months. The account allows a higher monthly deposit of £300, which totals up to £3,600 in savings over the course of a year.
At the end of the term, savers will have £3,736.50, including £136.50 in interest. Although First Direct’s interest rate is lower, the longer term and higher deposit limit make it a potentially better option for amassing larger savings.
Other providers offering competitive interest rates on regular accounts include The Co-Operative Bank with a 7% AER, Nationwide Building Society with a 6.5% AER, and Lloyds Bank with a 6.25% AER on its Club Lloyds account.
