Article
Earn yourself a better rate
Regular savings accounts from banks and building societies give substantially higher interest rates on small sums in return for a commitment to make consecutive monthly payments for a set period. They can also be used to save up for a deposit for your mortgage.
Some of the top accounts are currently paying an interest rate of 6% or more on monthly savings of as little as £10. To earn this type of rate you would normally need to have a sum of around £10,000 to invest.
Another benefit of regular savings accounts is that you can earn compound interest if you keep paying in for more than a year.
Such good interest rate terms do come with a catch - you have to keep up your contributions or you may be charged a penalty, for example, a loss of interest. Most banks insist that savers sign a standing order or direct debit although some will allow over-the-counter payments.
There are some 40 accounts on offer from institutions ranging from leading high street banks to small, local, building societies. Terms vary widely. But all monthly saving schemes offer variable interest rates so the level quoted can go up or down, depending on changes in interest rates.
When you are comparing deals check the small print for items such as charges for withdrawals and penalties for missing a monthly payment.
National banks and building societies offer greater accessibility but may not have the best rates.