Regular savings account

Please note: Raisin UK does not currently offer regular savings accounts. We have provided this guide to help you understand how they work and compare them against other savings options.

Regular savings accounts can help you save towards a particular goal or build your savings over time, usually while benefitting from preferential interest rates. They may also help you to establish good savings habits and learn how to save consistently. 

On this page, you’ll learn more about regular savings accounts, how they work, and the key benefits. We also cover important things to consider when comparing regular savings accounts.

Regular savings accounts tend to offer higher interest rates than standard easy access savings accounts. However, check deposit limits to see how much you can pay in during the fixed period. At the end of the term, your accumulated savings and the interest you have earned are usually transferred to a nominated current account or an easy access savings account.

Most regular savings accounts set a strict limit on the minimum and maximum amount you can deposit each month. These limits usually range from a minimum of £10 up to a maximum of £500, although in some cases, you might be able to save more depending on the provider.

As you will need to stay within these monthly limits, regular savings accounts are designed for steady, incremental saving rather than depositing large lump sums. If you miss a monthly payment or fail to meet the minimum deposit requirement within the agreed schedule, your bank may penalise you by lowering your interest rate or even closing the account.

Higher interest: Regular savings accounts sometimes offer a higher rate of interest compared to standard easy access savings accounts

Short-term savings goals: Accounts usually have a 12-month term, so they can help you meet short-term goals such as saving up for a wedding, a car, or a holiday

Building good habits: Regular savings accounts can help you commit to putting money away on a fixed schedule, while penalties for early withdrawals may reduce the temptation for impulse spending

Accessibility: You usually don’t need a lot of money or a large lump sum to begin saving, as deposits can be as low as £10 a month

Before you decide if this type of account is right for you, here are four facts to keep in mind:

• What happens if you miss a monthly payment: Regular savings accounts can have strict rules. If you miss a monthly payment or fail to deposit the minimum amount, you will usually be penalised. This could mean a reduction in the interest you earn, or in some cases, your bank might even close the account.
• Withdrawing money from your account: Depending on the provider, account withdrawals are restricted and may be prohibited altogether. If a bank does allow you to withdraw your savings before the end of the term, you will typically face a penalty, such as a drop in your interest rate. Accounts may be closed if this goes against the conditions. 
• Paying tax on your savings: As with any other type of savings account, the interest you earn from a regular savings account is taxable. However, under the Personal Savings Allowance (PSA), basic rate taxpayers can currently earn up to £1,000 in interest completely tax-free each tax year. For higher rate taxpayers, this allowance is £500. Note that for additional rate taxpayers, PSAs don’t apply. 
• Inflation risk: It’s important to consider that if the interest rate on your savings account is lower than the rate of inflation, the real purchasing power of your money will decrease over time.

If you’d like a little more flexibility in accessing your savings, you might also consider an easy access account.

When choosing a savings account, it helps to understand how a regular saver compares to other options. Here’s an overview of regular savings accounts alongside easy access accounts, fixed rate bonds, and notice accounts.

Yes, money you deposit into UK-regulated banks and building societies is protected by the statutory Financial Services Compensation Scheme (FSCS).

This scheme protects your eligible deposits up to £120,000 per person, per banking group (or up to £240,000 for joint accounts) in the unlikely event that your provider collapses. It’s important to note that this limit applies per banking licence. If you hold multiple accounts with different brands owned by the same banking group, your total combined protection remains £120,000.

The best bank for a regular savings account will depend on your individual needs and savings goals.

Some banks offer highly competitive interest rates, but these may require you to hold an existing current account with them to be eligible. Other providers might offer slightly lower rates but provide more flexibility, such as allowing you to skip a monthly payment without penalty or make limited withdrawals.

To find the best option for you, it is important to compare the minimum and maximum monthly deposit limits, check whether the interest rate is fixed or variable, and carefully read the terms regarding missed payments before opening an account.

Aside from withdrawing your savings to pay for something special, you could use the money you’ve saved to make a lump sum deposit into a fixed rate bond or notice account, which potentially offer competitive rates depending on the term length or notice period. If you want to open a lump sum savings account, explore short term notice accounts and easy access savings accounts which offer variable rates, as well as longer term fixed rate savings accounts.

Whether you are looking to lock away a lump sum, earn a higher variable rate, or keep your cash handy for when you need it, we can help.Registering for a Raisin UK account is completely free. Once your application is approved, you can fund your account and apply for multiple savings products from our partner banks, all from one secure platform.