This makes it one of the highest-paying regular savings account available, beating similar open-to-all accounts from NatWest and Royal Bank of Scotland, which pay 3.3%.

The only account to beat this rate comes from Cambridge Building Society. It pays 5% interest but is only available for existing members who have held an account for at least three years.

This will be welcome news to savers, as rates have been kept low since the beginning of the coronavirus pandemic in 2020.

The Bank of England has begun slowly increasing the base rate, up to 0.75% in February, and there are predictions it could rise further in May. This could result in more banks offering higher rates of interest.

How to get the 3.5% regular saver rate

The First Direct regular saver account can be opened online or via the bank’s app from Thursday 28 April, with a minimum deposit of £25. It is only available to First Direct customers with a current account.

Up to £300 can be paid in every month, or £3,600 in a year, but if the monthly limit isn’t hit, allowances can be carried forward from previous months.

New customers switching their current account to First Direct can also benefit from a £150 bonus. Those who just open an account, but not through the Current Account Switching Service (CASS), will receive £20.

The bank has also increased rates on its cash ISA, its bonus savings account, and its fixed-rate saver, although none of these are market-leading.

Chris Pitt, CEO of First Direct, said: “As inflation and household bills continue to rise, so too does the need for people to make their money go further.

“This market-leading rate reflects our commitment to ensuring customers – both new and existing – can squeeze every penny out of their hard-earned pounds.”

Rachel Springall, spokesperson for Moneyfacts, said: “It is incredibly positive to see first direct offering a more attractive regular savings account which could appeal to consumers looking to start up a savings pot and are happy to take out a 1^st Account. New current account switchers using CASS will also get £150 cashback so it’s a tempting offer. However, with every current account its vital consumers weigh up both the benefits and charges on an account to ensure it’s the right all-round deal for them.

“The majority of regular savings accounts on the market are either exclusive to new or existing current account customers or have some kind of eligibility criteria, so savers will need to compare deals carefully before they apply.”