Martin Lewis has highlighted regular saver accounts as a high-paying option available from many major banks, with top rates reaching up to 8 per cent. Speaking on his BBC podcast, he explained that these accounts typically allow monthly deposits of around £300 for a year at a fixed or variable interest rate, which is higher because the total amount invested is limited.
Top Regular Saver Rates from Big Banks
Several leading banks currently offer competitive regular saver rates. Santander's Regular Saver pays 8 per cent variable on deposits up to £200 a month. First Direct offers 7 per cent fixed on up to £300 a month, while the Co-operative Bank provides 7 per cent variable on up to £250 a month.
Nationwide Building Society's Flex Regular Saver pays 6.5 per cent variable on up to £200 a month. NatWest's Digital Regular Saver offers 5.25 per cent variable on up to £150 a month. HSBC and Lloyds Bank both have regular savers paying 5 per cent fixed on up to £250 a month. Many local building societies also offer similar accounts with comparable rates.
Common Interest Rate Misunderstanding
Mr Lewis also addressed a frequent misunderstanding about how interest on regular savers is calculated. He noted that savers often expect more interest than they receive because they calculate the rate on the total annual deposit rather than the average balance held throughout the year.
Using an example of paying in £250 a month, or £3,000 over a year, into an account paying 6 per cent, he explained that savers might expect £180 in interest. However, because money is drip-fed monthly, the actual interest is roughly half that amount. He advised: "Count the money halfway along, if you're maxing it, which in this case, if it's £3,000, would be about £1,500, and then think 6 per cent of that, and that's roughly how much you're going to get out."
Practical Example of Interest Earnings
For instance, a saver with Nationwide's Flex Saver paying 6.5 per cent who deposits £200 each month for a year would not earn 6.5 per cent of £2,400, which is £156. Instead, they would receive just over half that amount, totalling £84.50 in interest over the year.
