Max out regular savings accounts to beat inflation
Those who use and deposit the maximum allowed into regular savings accounts instead of an easy access or current account can earn up to £165 in interest. But the one caveat though is that savers need to be prepared to switch bank account as many of the top-paying accounts require you to also be a current account customer.
Those who don’t want to switch could still earn up to £98, according to research from data site Moneyfacts.
Rachel Springall, finance expert at Moneyfacts, said: “While the thought of saving a regular fixed sum each month may be daunting, it’s vital that anyone hoping to save enough cash for a specific goal takes the time to consider a regular savings account.
“High interest current accounts may well be grabbing savers’ attention, but due to their limitations, there are still savings deals out there that can beat them. If savers plan carefully, they could instead switch to a current account that has a linked regular saver paying an inflation-beating rate, which would allow them to save more.”
Nationwide Building Society offers a Flexclusive regular saver paying 5%, allowing a maximum £6,000 in total over the year and earn £165 in interest.
Saffron Building Society’s deal pays 3.50% and savers can put away £2,400, earning £46, while Kent Reliance pays 3% with a maximum investment of £6,000, earning £98.
“These are outstanding returns when considering the average easy access account pays 0.39%,” Springall said.
“The only flaw to regular savers is that they are not designed for taking out cash, as you can get penalised for doing so, which is why some people prefer to use easy access accounts. However, this flexibility can cost savers dearly in interest and the temptation to remove cash may be too great, which can result in a substantial delay in reaching a savings goal.”
For those saving for their first property, the Help to Buy ISA and Lifetime ISA pay a 25% bonus from the government, which can help reach the goal of homeownership more quickly.
Springall added: “It’s never too late to start saving towards a specific goal. If consumers take some time to arrange a regular deposit straight out of their bank account, it will remove the fuss of making separate monthly deposits and effortlessly build a decent nest egg over a year, which will be a nice surprise.”