Best regular saver accounts to build your pot as Coventry and Lloyds boost rates

Lloyds Bank has boosted the rate on its regular saver to 6.25 per cent, while Coventry Building Society has upped its version to 5.5 per cent.

Regular savers are billed as an ideal way to build up a cash reserve on a monthly basis from scratch – and encourage savers to get into the habit.

The Lloyds deal allows savers to tuck away £400 per month and Coventry £500 – amounts that are generous compared to other offers from providers.

Regular savers can be a good option for those who want to instil a regular saving habit 

But while banks are keen to push regular saver deals, they can trip up unwary savers.

For example, many regular saver accounts boast high interest rates that are not as generous as they first appear.

Most banks require you to have a current account to open a regular saver, but Coventry Building Society for example will let savers open its 5.5 per cent deal without one.

We crunch the numbers to see how it stacks up to other top regular savers on the market – which one offers the biggest bang for your savings buck?

First Direct Regular Saver – 7%

First Direct has a regular saver with a rate of 7 per cent – the top interest rate available on these deals.

You can deposit between £25 and £300 a month, up to a maximum of £3,600 a year.

You must have a First Direct current account to be able to apply for this account.

After the first 12 months, the account reverts to a savings account which pays a rate of 2 per cent a year.

If you saved the maximum £300 every month for 12 months you’ll earn up to £136.50 interest a year with the 7 per cent rate.

You can also use its current account switching offer to grab an extra £175. 

Club Lloyds Monthly Saver – 6.25%

Lloyds Bank offers a rate of 6.25 per cent on its regular saver. You can deposit between £25 and £400 per month, which needs to reach your account before the 25th of the month.

But there are more restrictions for savers wanting this account. You must hold or open a Club Lloyds current account, which has minimum monthly deposit of £1,500. If this condition is not met, a £3 fee will be paid for maintaining the account that month.

If you were to deposit the maximum amount of £400 each month, you would get £150 in interest over the year.

It is currently offering a £175 current account switch. 

NatWest Digital Regular Saver – 6.17%

NatWest’s regular saver has one of the lowest maximum deposits, at just £150 per month. The bank pays a rate of 6.17 per cent a year and you can deposit a minimum of £1 a month.

You must have a NatWest current account to open its regular saver.

If you saved the maximum of £150 a month for 12 months, you would earn £59.85 in interest. So £1,800 would grow to £1,859.85 after this term.

Beehive Money – 6%

Beehive Money is part of Nottingham Building Society. It pays 6 per cent on its regular saver and this rate is fixed until 30 September 2024.

You can save up to £250 every month in this account, meaning you could earn £97.50 on a maximum balance of £3,000 over the 12 months.

Halifax and Bank of Scotland Regular Saver – 5.5%

Halifax and Bank of Scotland pay 5.5 per cent on its regular saver accounts. You can save up to £250 a month in these accounts.

If you saved £250 a month in these accounts, you would earn £82.50 in interest by the end of the term.

Coventry Building Society – 5.5%

Coventry Building Society has boosted the rate on its regular saver to 5.5 per cent, rising by 0.45 per cent.

Savers can deposit up to £500 in the account each month, meaning a maximum of £6,000 can be saved within its 12-month term.

With the new interest rate, if you were to deposit the maximum amount each month, you could earn up to £178.75 in interest after 12 months.

Crucially, that means the most amount of interest you can get on a regular saver – and without needing a current account, could make it an attractive option. 

Is a regular saver account right for me?

For those who would like to put money away every month, or want to get into the habit, regular savers could help.

There are several strings attached to regular saver deals though.

Firstly, if you withdraw any money from your regular saver you will get a lower rate of interest and some accounts could even be closed for doing this.

Savers also need to be aware that how interest rates are worked out on regular savers is different to other savings deals.

For example, if an easy-access account pays 7 per cent interest a year, if you saved £100 you would earn £7 in interest.

But with a regular saver, if you saved £100 a year in a 7 per cent account you would earn far less than £100.

This is because you only earn a fraction of that headline rate per month, every time you top the regular saver up.

For example, the top regular saver rate, from First Direct pays 7 per cent interest and lets you save up to £3,600 a year.

Seven per cent of £3,600 is £252, but the First Direct deal does not pay that amount.

Instead it only pays a maximum of £136.50 a year.

Banks have to point this fact out in their terms and conditions, but many savers remain unaware of it.

But savers that want to put away money every month could earn far more ignoring regular savers and looking at deals such as easy access accounts instead.

For example, if you put £500 in the top easy-access account with a low minimum deposit – from the Family Building Society, paying 4.96 per cent – you would have £138.30 after 12 months. 

This post first appeared on Dailymail.co.uk