The Tipton and Coseley Building Society has launched a fixed rate regular savings account with a competitive 6.2 percent interest rate – and people can get started with £25.
Regular savings accounts can be a good option for people looking to start building up a savings pot. These accounts typically offer some of the highest interest rates on the market and the terms generally encourage savers to pay money into the accounts monthly with limited withdrawals.
The interest rate on The Tipton account is fixed until October 31, 2024, meaning savers can benefit from the higher returns for a year, despite fixed rates fluctuating in recent weeks.
Savers must be 16 or over to open an account and have between £25 and £250 to deposit every month.
To provide an example of the pot people can amass, The Tipton said the balance after 14 months, based on 14 monthly deposits of £250 with an interest rate of 6.2 percent Gross/AER, would be £3,636.24.
Interest is calculated daily and paid annually on December 31 and again at maturity. However, withdrawals are not permitted until the account matures, so savers must be comfortable investing their money without dipping in.
But while The Tipton may be offering an attractive rate, it isn’t topping the tables just yet. According to the Moneyfactscompare.co.uk Best Rates board, online bank first direct is currently taking the lead with an AER of seven percent on up to £3,600 per year.
The account is available to first direct current account holders and interest is calculated daily and paid on maturity one year after opening. Savers can deposit between £25 and £300 per month in multiples of £5.
Withdrawals are not permitted throughout the duration of the 12-month term. In the event of this, the account will have to close and interest will be paid up to the closure date at the Savings Account variable rate instead.
The Club Lloyds Monthly Saver falls just behind with a 6.25 percent AER and customers can benefit from easy access to their cash, with no penalties applied to early withdrawals.
This particular saver is only available to Club Lloyds current account holders who have not already opened one of these accounts in the last 12 months, and customers must be a resident of the UK and aged over 18.
The 6.25 percent AER is fixed for 12 months and will be applied on the anniversary of the account opening. A minimum deposit of £25 is required, after which savers must invest £25 to £400 every month by one standing order.
Commenting on the market, Rachel Springall, finance expert at Moneyfacts, said: “Savers may be delighted to see average rates reaching levels not seen since 2008.
“The average rates on one-year and longer-term fixed bonds and ISAs all stand above five percent for the first time in almost 15 years (November 2008). Due to intensive competition among challenger banks, average fixed rates have risen for the past six months.”
However, she added: “There is room for improvement and some savers may not be feeling the full benefits of the consecutive base rate rises, nor might they be getting the best possible return if they fail to switch.
“As UK Savings Week begins, it’s a good reminder for savers to review any existing accounts and any personal savings goals. Comparing different types of accounts and exploring the more unfamiliar brands is wise, particularly when challenger banks offer some of the most lucrative returns.”