Best regular savings accounts: Yorkshire Building Society launches 5% deal

Yorkshire Building Society has launched a regular savings account paying 5 per cent interest with customers able to deposit up to £500 each month, a far highly limit than other options.

It means Britain’s second biggest mutual is offering a market leading deal paying 1.5 percentage points more than the next best competitor.

A regular savings account is a monthly saver which allows people to set aside cash each month up to a certain amount and can be a great way to build up a cash pot over time. 

Best in town: Yorkshire Building Society’s market leading deal offers a 1.5 percentage point higher return than the next best competitor. 

They can be an ideal option for those looking to kickstart a savings habit, who may not already have a cash pot built up.

This deal allows customers to start saving with just £10 and save up to £500 each month for one year.

Someone depositing the maximum £500 each month over the course of one year could expect to earn £161 in interest.

To bag the equivalent interest on an easy-access account on that top level £6,000 that can go into this account would be around 2.7 per cent. The top rate on an easy-access account at the moment is 1.6 per cent.  

However, the catch is that its regular savings deal is exclusively targeted towards its 3million members.

It is only available to those who either save or have a mortgage with the mutual and existing customers must have had a continuous membership for at least 12 months prior to applying for the deal.

So savers can’t just set up an easy-access deal and immediately take advantage unfortunately.

Members who qualify, can open the account in branches, agencies and online.

Hayley Tepliakov, senior savings proposition manager at Yorkshire Building Society, said: ‘Regular savings accounts are one way we can encourage our members to establish healthy savings habits.

‘We’re really proud that this new account, which comes with a highly competitive interest rate and a generous monthly deposit limit.

‘Previous issues of this account have proved popular with savers and we’re sure this latest edition will be equally as well received.’

How does it compare?

This deal really is a cut above the rest due to its generous £500 monthly allowance and 5 per cent rate for the first 12 months.

The next best deal is currently offered by First Direct paying 3.5 per cent on deposits of between £25 to £300 a month for the first year.

Someone putting away the maximum £3,600 in this account could earn about £68 in interest after one year. That is roughly 1.9 per cent on a lump sum of £3,600.

The First Direct deal is only available to customers with a current account at the bank. It’s also worth pointing out that accessing the cash before the 12-month deal ends will cause the rate to plummet to 0.1 per cent.

NatWest and RBS both currently pay 3.3 per cent on balances up to £1,000 with a maximum monthly deposit of £150 allowed.

However, once savers exceed £1,000, the irate falls to 0.3 per cent on balances between £1,001 and £5,000.

Someone stashing £150 into this account each year could expect to earn just £26 over the course of one year.

Santander and Nationwide both pay 2.5 per cent and allow £200 to be saved each month – up to £2,400 in a given year.

For some stashing away the maximum £200 each month into either of these accounts, they could expect to earn £32 interest over the course of one year.

TSB also pays 2.5 per cent fixed for one year, but allows up to £250 to be deposited each month. Someone could a maximum of £35 in interest after one year.

For those who are eligible, Yorkshire Building Society’s offer is therefore considerably better. 

However, it’s worth noting that its regular savings account only allows money to be withdrawn on one occasion throughout the first year without penalty, or if closing the account.

Furthermore, after the initial 12 months it will move your savings into an off-sale maturity account, which currently pays 1.15 per cent.

This post first appeared on Dailymail.co.uk