How monthly savers could get 4pc return

SAVERS rushed into the new regular savings plan from internet bank Ford Money this week.

The 4 pc fixed-rate deal on offer sold out within 24 hours.

Ford’s regular Saver Cash Isa account, also at 4 pc for a year, is still on sale, but unlikely to last until the end of the week.

But the new bank plans to offer similar products later this year. Unlike other top rate monthly savings plans, the cash Isa is open to all aged 16 or over and you can miss payments without losing out on the rate.

In the months when you add to your savings you can put in between £25 and £250 a month.

Putting money aside each month is the best way to build up a lump sum. You can take money out at any time during the year, though you will lose three months’ interest.

Banks such as HSBC and its offshoots First Direct and M&S Bank only offer their top regular savings plans paying 5 pc to current account customers.

First Direct’s 1st account holders can save between £25 and £300 a month. At £300 a month you’ll have £3,697.50 after 12 months; if you save £100 a month, you’ll have £1,232.50.

HSBS and M&S Bank customers can put in between £25 and £250 a month. With all three you can change the amount you put in each month, but can’t make withdrawals or miss payments.

Another good deal is Virgin Money’s Regular Saver — available online or through its branches — which is basically an easy-access account with a rate of 2.25 pc fixed on between £1 and £250 a month.

You can take money out, miss payments and still earn 2.25 pc.

Saffron BS pays a higher 3.25 pc fixed for 12 months on between £10 and £ 200 a month and allows withdrawals, but it is available only through its limited branch network.

Certain regular savings accounts, such as Santander and Kent Reliance, both at 3 pc, come with variable rather than fixed rates, which means it could change during the year.

Watch what happens after the first 12 months. Some move your money into a poor-paying easyaccess account — so switch to a better deal and open another plan for your new savings.

You earn interest only once your monthly payments hit your account. Your first payment earns 12 months’ interest — you’ll see £5 a year on your first £100 saving at 5 pc. The second £100 earns interest for 11 months — or £4.60, and so on. Your final £100, in the account for one month, earns just 42p. If you are saving for a deposit for your first home, then start with a Help To Buy Isa monthly savings plan to earn the generous 25 pc bonus from the government. The most you can put in is £200 a month with no limit on the amount of time you can save. The maximum bonus is £3,000 on £12,000, giving you £15,000. The minimum is £400, so you need to save £1,600 to get one at all. It’s paid out when you buy your home rather than when you put down the deposit. The most you can put in is £200 a month, though you can kickstart your plan with a £1,000 lump sum. Top deals include Barclays at 2.27 pc along with Virgin Money, HSBC, NatWest and Halifax all at 2 pc.