The new regular saver account and regular saver cash ISA products will turn savers’ heads in today’s dampened savings market, where rates have been hovering below the 1% mark for months.

Both will be available to all savers online and via the telephone, not just those who already hold a Ford Money account.

The regular saver account can be opened singly or jointly, which means couples can either individually open one account each or hold one joint account – you can’t have both a single and joint account.

Savers can stash away between £25 and £250 each month, meaning the most you can earn is £65.26 after 12 months (on the maximum £3,000). The amount you can save each month can vary so you won’t be penalised if you don’t make deposits every month.

The 4% rate will be paid for the first 12 months but after this, if you don’t make an active decision to move your money elsewhere, your money will be moved to Ford Money’s flexible saver which currently pays 1% AER. For the ISA, it will be moved to a flexible cash ISA, which currently pays 0.9% AER.

Car manufacturer-come-new savings provider Ford Money operates a 14-day cooling off period on both products which means account holders can withdraw their money, or close their account, within that time without penalty.

However, after this time, those with the regular saver account won’t be able to withdraw their money or close their account within the first year. For those with the cash ISA product, withdrawals and transfers are allowed but you’ll lose 90 days’ interest on the amount taken out. But as the regular saver cash ISA is classed as a Flexible ISA, you’re allowed to withdraw and replace money in the same tax year without losing your tax-free entitlement.

Both products come under Ford Money’s ‘best rate guarantee’ which means if interest rates increase before you’ve made an initial deposit, the account will be automatically upgraded to the new rate. Savings also come under the Financial Services Compensation Scheme (FSCS) which means amounts of up to £85,000 are protected if anything were to go wrong.

Julian Hynd, chief deposits officer at Ford Credit Europe, which Ford Money is part of, said: “Getting into a regular savings habit is important but we understand that everyone’s circumstances and needs are different. We will not penalise those who are unable to deposit monthly; instead, savers will have the flexibility to put money away as and when they can.”

How good is Ford Money’s regular saver ISA?

While regular saver ISAs have been around for a while they don’t appear to be very popular with providers, as only a handful are currently available according to Tom Adams, head of research at independent savings advisers, Savingschampion.co.uk.

“It is possible that demand from savers is low because if you are looking to save on a regular basis, there are standard regular savings accounts that pay far better rates than those currently available among regular saver ISAs,” he said.

Currently the highest rate available on a regular saver ISA is 2.25% tax free/AER from Nottingham Building Society, but this can only be opened in branch so restricts accessibility for many.

Adams said that Ford Money could really corner the market with this new rate to attract savers looking to add smaller amounts to their cash ISA on a regular basis.

He said: “For those looking to take advantage of the regular saver ISA, but also pay into other types of cash ISA with Ford Money, the provider allows this. Whilst ordinarily you can only pay into one cash ISA per tax year, a small group of providers, including Nationwide, Aldermore and the Post Office for example, will allow you to open several types of cash ISA with them with it still only counting as one cash ISA overall.

“For example, if you wanted to pay into a Help to Buy ISA, but also wanted to use the rest of your ISA allowance, some providers will also let you open an easy access cash ISA. Other providers will allow you to open a mix of variable rate and fixed rate cash ISAs. It is important to note that not every provider will allow this, so check carefully with your chosen provider before proceeding if you intend to make use of this,” he added.

How good is Ford Money’s regular saver account?

The 4% regular saver would be a top rate for new customers, according to Moneyfacts’ finance expert Rachel Springall.

Savers can get 5% with first direct, HSBC, M&S Bank, Nationwide and Santander – but these are either tied to a current account or you have to be an existing customer. The next best new customer deal is 3.50% from Saffron Building Society, but this can only be opened in branch.

Springall said: “The new regular saver from Ford Money paying 4% is a fantastic deal that savers would be wise to consider when they do decide to build a pot for a specific goal.

“As it pays a fixed interest rate, savers can be rest assured that they will receive a highly competitive rate over the next twelve months, where they could build up £3,000 worth of savings.

“Considering the average easy access rate stands at just 0.38%, its clear to see how savers can do significantly better as they put their money aside, especially as this new regular saver won’t penalise savers if they fail to put money away each month.

“Savers can also rest assured that if Ford Money raises rates for new customers, they will also benefit, thanks to the best rate guarantee.”