For savers looking for the best interest rates available, many have begun to turn to regular savings accounts, industry experts recently said.
Personal and business bank account providers have been experiencing an increased take-up of regular savings accounts as savers look for the best rates. As suggested by their name, these accounts require savers to make regular deposits every month, which differs from standard savings products where savers deposit a lump sum.
These types of accounts pay much higher than other savers, with some financial services providers offering as much as 8 per cent interest. However, savers need to make a regular monthly commitment for a standard term – usually a full year – and these accounts are further restricted by both minimum and maximum deposit amounts.
Customers may expect massive returns on their cash, yet because of the monthly nature of these regular savings accounts, sometimes savers’ expectations are dashed, according to one financial expert. Moneynet representative, Andrew Hagger, said that banks and building societies can offer such attractive rates due to the restrictions placed on the deposits, which have yearly maximums of around £3,000 to £3,600.
This means that savers need to do some maths before committing to a regular savings account, as sometimes an instant access saver can result in better returns. Experts say that regular savers are an excellent choice if you’re starting from scratch, and are an excellent way to begin your savings pot – yet if you want to invest a sum of money that exceeds the annual deposit limit, traditional savings products will result in better returns.
For those Brits with existing savings pots undeterred from taking up a regular savings account, drip-feeding a regular saver from an instant access saver that permits multiple withdrawals is the best method for maximising returns.