Digital bank Zopa is offering savers a “highly attractive” 7.1% interest rate on its regular savings account.
Regular savings accounts work well for people looking to save a fixed amount each month. They typically run for around 12 months and earn a higher interest rate than standard savings accounts in return. Zopa’s 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.
Commenting on the deal, Rachel Springall, finance expert at Moneyfactscompare.co.uk, told Express.co.uk: “The regular savings account from Zopa offers a highly attractive rate of 6.87% gross (7.1% AER) and allows savers to invest £300 per month for a year.”
To launch the account, customers must have a Zopa bank account and a Smart Saver account, the latter requiring a minimum deposit of just £1. They must also be 18 or over and UK residents with UK tax residency.
Unlike many other regular savings accounts, Zopa’s saver allows withdrawals at any time without penalty. Ms Springall described this as one of the account’s “biggest benefits”, adding: “It’s great for those who might need quick access to their cash.”
However, it should be noted that any money withdrawn can only be replaced up to the monthly limit of £300.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.
How does the account compare?
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 put up to £200 away per month, meaning the pot can grow to a total of £1,200. Withdrawals are not allowed until the account matures.
With a maximum monthly deposit of £200, customers 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 also 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.
Ms Springall said: “It can seem a little confusing to pick the right savings account as there are so many options out there. A regular savings account is a good choice to instil the savings habit, as many of these accounts require savers to put money away every single month.
“Easy access accounts provide the most flexibility, and some savers may want a pot they can quickly access in case of a financial emergency.”
She added: “However, there are some attractive regular savings accounts that do allow withdrawals, so savers just need to check any terms and conditions carefully to ensure they are up to speed with how it works.”
