Last Updated on 3 September 2025 by Dan Wilderness
Hello everyone! As interest rates have accelerated this year, a number of banks have put out some eye-catching interest rates on their regular savings accounts. However, when you starting looking into these accounts, they often have restrictive limits on how much you can save.
There’s a question here of if regular savings are a good deal – so today I wanted to cover if regular savings accounts are worth it, things to look out for and how to assess if a regular savings account is a good deal or not.
As ever – our normal note that we take care with what we write on this site but it is not official “financial advice” and whatever investments and savings you enter need to be right for your circumstances. We always suggest doing your own further research. If you’re in doubt about anything, it’s worth consulting a regulated and reputable financial advisor who can provide tailored advice built for you.
Unbiased is a resource that can help you match with an advisor who matches your needs.
What is a regular savings account?
A regular savings account is an account with a bank where you can pay in an amount on a regular basis in order to achieve a more beneficial interest rate. You often need to have a current account with the bank in order to access them.
They usually have a restriction associated with them on a maximum value to pay in each month, which is often between £50 and £300.
Occasionally you’ll have to pay in a minimum each month to qualify, but this is rare – most accounts will let you skip months.
Some examples of better-paying regular savings accounts in the market at the time of writing include:
- Nationwide Flex Regular Saver
- Skipton Building Society Member Regular Saver
- First Direct Regular Saver
- Club Lloyds Monthly Saver
Why is a regular savings account good?
A regular savings account can be really helpful, because by having a fixed amount it can act as a clear motivator to save a regular amount on a regular basis and build a savings stack you normally wouldn’t.
Often, people have the intention to save, but don’t do the reality. If you open a regular saver, we’d recommend setting up a regular payment from your account directly into it.
Is an regular savings account the best option?
However, there’s a couple of catches with regular savings account, one obvious and one less obvious.
A regular savings account ties up your money (but you can usually withdraw).
A regular saver by it’s nature means you have to leave money in the account, which may not be ideal in an emergency situation.
However, in practice most will let you take it out during the term – but in some cases you’ll lose a proportion of the interest you would have earned by doing this. It’s important to check the T+C’s of your specific account if you find yourself in this situation.
Ideally, money going into a regular saver should be money you don’t think you’ll need to touch.
The interest rate on a regular savings account will not be as high as the headline
Many people think that if money goes into a regular saver advertised as having a 7% interest rate that they’ll get 7% on top of all the money they’ve put in over the term.
This isn’t accurate – you will earn that rate, but only on the money in ther account at any time, not over the term. And this is important because many people get lured in by what look like very good regular saver headline rates, but actually aren’t competitive.
Let’s take an example – I’ve got an account with offers a headline rate of 7% and allows £300 to be paid in per month.
In practice, this means I’ll put £300 in the account in Month 1, and earn 7% on 12 months of interest.
However, my next £300 which I put in Month 2 will only earn 7% on 11 months of interest.
As a result, the overall annual figure drops, and this is important because you may actually find that after you adjust for this compounding an easy-access account which pays interest on a monthly basis beats that headline rate.
How can I work out the true annual rate of interest on a regular savings account?
A broad calculation can be made that if you save the same amount each month, you’ll get approximately half of the stated interest rate.
In the case of my 7% regular saver above, that means I’m actually earning 3.5% – which at time of writing does not beat top easy access savings accounts where near 5% interest rates can be earned.
Tax and regular savings accounts
With a regular savings account, the interest is generally paid at the end of your year of saving, meaning you’ll earn a pot of interest in one go.
Just remember that interest above the personal savings allowance will be charged tax equivalent to your highest rate of income tax.
All below figures based on the 2023/24 tax year, and accurate at time of writing.
For people who pay the basic rate of tax, you have a £1000 Personal Savings Allowance
If you pay a higher rate of tax, you have a £500 Personal Savings Allowance
And if you’re an additional rate taxpayer, unfortunately there’s no Personal Savings Allowance.
You can see full details on the Personal Savings Allowance at the Gov.UK website here.
So is a regular savings account worth it?
It can be, but this post was meant to indicate that whilst many people gravitate towards the regular savers because of the high headline rate, when calculated for the gradual drip feed of money they’re often not that competitive vs. other accounts.
We’d always give regular savers a look as they’re often easy to tie in with existing accounts – but it’s worth doing that comparison, as why tie up your money for a worse rate?
If you think you need a regular saver to get in a savings habit, there are other ways – setting up a regular payment from your current account to a high-interest easy access account can be a great option!
Another option is to consider alternative products – we’ve compared returns from savings accounts vs premium bonds vs index funds here.
The most key thing of all is that it’s worth putting in a bit of time to looking at savings – far too many people have too much in low-interest current accounts. We don’t have the resources to constantly update best buy tables, so we’d recommend the best savings account pages over at Money Saving Expert.
Alternatives to Regular Savings Accounts
If looking for the best interest rates available, another alternative worth considering may be an active savings account (our fuller thoughts at the link).
These are accounts that effectively give you access to accounts at lots of banks, and move your money automatically depending on who has the best rates available.
It may also be worth switching bank accounts to lock up the best rates possible, and consider all accounts rather than just regular saver accounts.
Any questions?
If you think you’ve identified a particularly good regular saving account or have any questions we’d love to hear from you! Just let us know in the comments below.
And that’s it!
Thank you for reading! You can sign up below to get our new articles delivered to you on a range of financial topics, or remember you can follow our Facebook, Twitter and Instagram pages.
