While savings interest rates fluctuate, Principality Building Society is offering people keen to regularly put away cash a market-leading 7.5% interest rate on its regular account.
Regular savings accounts typically require people to deposit a set amount each month. They work well for disciplined savers who want to build their savings over time, and they benefit from higher interest rates than standard accounts. Principality Building Society’s account runs for six months, and interest is paid on maturity. Savers can invest up to £200 per month, allowing the pot to grow to a total of £1,200, and withdrawals are not permitted until the account matures.
How does the account compare?
While Principality Building Society may lead with an Annual Equivalent Rate (AER) of 7.5%, its six-month term limits the total interest earned. With a maximum monthly investment of £200, savers will end up with £1,227.53, including £27.53 in interest.
In contrast, Zopa offers a 7.1% AER over 12 months with a higher limit of £300 per month, allowing savers to amass £3,600 in total savings. Interest is paid at the end of the term, with a full £3,600 deposit expected to earn around £255.60, bringing the total balance to around £3,855.60.
Although the interest rate with Zopa is lower, the longer term and higher deposit limit make it a potentially better option for larger savings.
Unlike many regular savings accounts, savers are allowed to withdraw money from the Zopa savings account at any time without penalty. However, they’ll only be able to replace the money within the monthly allowance of £300. For example, if you withdraw £500 but want to put money back in, you can only deposit up to £300.
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. Withdrawals are not permitted until the term ends.
The Co-operative Bank is also offering a 7% AER on its Regular Saver (Issue 1) for 12 months.
Savers can invest up to £250 per month, building total savings of up to £3,000, and can earn up to £114.21 in interest. This account also offers more flexibility, as people can make withdrawals without facing a penalty.
Savers are being urged to act quickly to secure the top rates while they’re still available. Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said: “Savers will be disappointed to see variable savings rates fall across the board over the past month, showing how essential it is to find out if their savings pots are working as hard as they should be. Loyalty does not pay, so it comes down to savers to proactively review rates and switch their accounts if they are getting a poor return on their hard-earned cash.
She added: “The cuts to the Bank of England Base Rate spell misery for savers, as banks are quick to slash rates in response and cuts can create an apathetic attitude among aspiring savers as a result.
“It is vital that savers look beyond the high street banks and instead take notice of the many challenger banks and mutuals competing in the savings arena.”
