Get a better return with a 'regular saver' account

If you’re putting aside money every month and want a good rate on it, a regular savings account could help. Cris Sholto Heaton picks the best.

Interest rates on most savings accounts today are frankly derisory even the best easy-access account currently offers just 1.4%. So if you've maxed out your Individual Savings Account (Isa) allowance, exploited as many of the high-interest current accounts as you can such as Club Lloyds (up to 4% on £5,000) and Santander 123 (up to 3% on £20,000) and still have money to spare, you may be struggling to decide where to put it.

Fixed-term savings accounts are the obvious option. But getting a decent rate requires ever-longer fixes: for 2.5%, you now need to tie up money for three years, hardly compelling. It may be your only choice if you're looking for a home for tens of thousands of pounds. But for smaller amounts especially if you're steadily putting aside a few hundred extra per month and want a good rate on it one or more regular savings accounts could be a much better solution.

Regular savers work exactly as their name suggests. You put aside a certain amount of money each month for a fixed term usually a year. Most banks let you pay in a minimum of £25 per month and the maximum is typically £250-£400. The flexibility varies, but some let you miss payments, vary the amount you pay in, catch up in later months, or even make withdrawalsduring the one-year term. At the end of the term, your savings are transferred to a standard account. At that point, you can open a new regular saver and start contributing again.

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The best regular savings accounts require you to have a current account with the bank. The best picks in this category offer 6% a year: First Direct (pay in up to £300 a month), M&S Bank (up to £250 a month) and HSBC for its Advance and Premier customers (up to £250 a month it pays 4% for other customers). There's also the Club Lloyds regular saver, which pays a lower 4% but allows you to contribute up to £400 per month. Running multiple current accounts is not hard if you don't mind moving your money around to meet minimum pay-in requirements, but if you don't want to jump through this hoop, Leeds Building Society offers the best deal open to all.It pays 3.05% on up to £250 per month.

The account that your regular saver turns into after a year won't usually offer a good rate, so be ready to transfer the accumulated cash somewhere better. Thinking ahead can pay offhere. If you opened a regular saver now, it would mature at just the right time to top up your 2015/2016 Isa, or to start your 2016/2017 one. You could then start paying into a new regular saver, ready for your next Isa contribution.

Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.