Regular savings accounts make a roaring return

REGULAR savings accounts are staging a comeback as rates rise to a top 5 pc.

Yorkshire Building Society’s Loyalty Regular Saver Issue 2, which can be opened online or in branch, has an interest rate of 5 pc. Savers can deposit between £10 and £500 a month for a year, after which the rate falls to 1.15 pc. The account is available only to existing customers and withdrawals can be made once a year.

First Direct’s Regular Saver offers current account holders 3.5 pc, fixed for one year. Savers can deposit between £25 and £300 a month but if they make a withdrawal the rate falls to 0.1 pc. NatWest and RBS’s Digital Regular Saver gives 3.3 pc. You must have a current account with them and the most you can save a month is £150.

The rate falls to a much lower 0.3 pc on sums over £1,000 but you can make penalty-free withdrawals at any time.

Regular savings deals are also a good way to recycle money sitting in accounts with poor returns. There is some £994 billion in easy access accounts earning an average 0.2 pc. A further £264 billion is in current accounts earning nothing at all.

At 0.2 pc, you’ll earn just £6.50 interest on monthly deposits of £500 over a year.

But regular savings accounts do come with a host of terms and conditions.

To open a Yorkshire BS account, for instance, you must have been a member for at least 12 months. Cambridge BS has the same restriction with its Reward Regular Saver, which allows members to earn a fixed 3 pc on up to £ 250. Nationwide pays 2.5 pc on its Flex Regular Saver, available to current account holders. You can deposit up to £200 a month and make four withdrawals a year.

West Bromwich BS offers 2 pc with its Adult Fixed Rate Regular Saver on between £10 and £100 a month, but you can’t touch your money during the 12-month term.

And Coventry BS Regular Saver pays 1.8 pc on up to £500 a month for a year.

NHS workers qualify for Principality’s Thank You Saver, paying 1.8 pc (rising to

2 pc next Monday) on up to £250 a month.