You may think that getting an interest rate of 8% for your savings in the current economic climate would be an impossibility – but that’s what First Direct is offering with the launch of its new Regular Saver account. However, this is not designed for all savers, and there are a few catches.
The account rewards you with this great rate for regularly putting between £25 and £300 per month into the account for 12 months. Savings are limited to £3,600, and the interest is paid on the anniversary of the account opening.
What does this mean for savers?
If you were to put the maximum (£300) into the account every month, at the end of the year you would get an extra £156 gross on top of your £3,600 savings.
You can also amend the amount you save each month to fit in with your expenditure. If things are a bit tight, you can maintain a fairly low level of regular saving – but if you’re feeling flush later on in the year, you can increase your regular savings to take advantage of the maximum allowance for the account.
How does this compare with other regular savings accounts?
Only one other regular savings account offers an 8% return: HSBC’s regular saver (incidentally, HSBC group also owns First Direct).
But the advantage of choosing First Direct’s account over its parent bank’s is the fact that First Direct comes top of all the banks in Which?’s customer satisfaction surveys.
While HSBC is by no means the worst-performing bank, it ranks in a far less impressive 15th place for customer service. First Direct also won Best Financial Services Provider at this year’s Which? Awards.
What are the drawbacks for savers?
Firstly, to get this great rate you have to be an existing First Direct customer. Its current account requires a minimum of £1,500 to be paid in each month, so it may not be suitable for everyone.
The regular saver account doesn’t allow you to make any withdrawals, so if you choose to open one you’ll have to be comfortable that the money you are saving is cash you can afford to go without each month.
Finally, the account is only really suited to regular savers because of the way interest is paid on deposits. If you have a lump sum you are able to invest in one go, you might be better off looking for a Best Rate savings account that will allow you to do that.
Use our new Savings Booster tool
Recent research from Which? has shown that savers are missing out on £12 billion a year by keeping their money in accounts that pay miserly rates.
Consumers can take action now, and could add hundreds of pounds a year to their savings returns, by using our unique Savings Booster. It allows you to see instantly what interest rate your account is paying – as well as the better rates that other banks or building societies could offer you if you decided to move your money.
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