New regular savings account pays 2.5%
Regular savings accounts tend to offer eye-catching interest rates, but they typically come with strict terms and conditions.
As the name suggests, you have to deposit a certain amount of money each month to get the headline rate and withdrawals are often limited.
Most are also linked accounts, which means you have to open a current account with the bank to get one, while others are only available to local customers or cannot be opened online.
The new account from Coventry stands out because it’s the top-paying, open-to-all, accessible online regular savings account on the market.
You don’t need to have an existing relationship with Coventry to get the new rate and the account can be opened in branch and by phone as well as via the web.
Savers can deposit up to £500 a month, which is more than with most other regular savings accounts. The minimum balance is £1 and there is no limit to the number of deposits you can make a month.
Any withdrawals made in the first 12 months will be subject to a penalty charge of 30 days’ worth of interest.
And after one year, the account automatically transfers to an easy access saver, which currently pays 1.05%.
Matthew Carter, head of savings and mortgages at Coventry Building Society, said: “The regular savings market is unnecessarily complex and people’s good financial intentions risk being stifled by the number of strings attached to many accounts.
“Excessive terms and conditions are a big turn-off for savers and yet we know there’s a big appetite across the UK for building up savings pots.”
Rachel Springall, finance expert at Moneyfacts, said: “It’s a great move by Coventry Building Society to launch a competitive regular savings account to encourage the savings habit into a market that doesn’t see much movement.
“As a trusted brand it wouldn’t be too surprising to see a flock of savers turn to Coventry Building Society to make their savings work harder for them.”
Better rates elsewhere
You can earn as much as 5% interest on regular savings accounts from First Direct, HSBC and M&S Bank as long as you have a current account with the provider.
However, the maximum monthly deposit limits are lower than Coventry’s – £300 with First Direct and £250 with HSBC and M&S Bank.
Virgin Money pays 3% for new and existing customers on monthly deposits of up to £250 but the account has to be opened in a Virgin branch.