Best regular savings accounts

If you’d like to squirrel money away every month, then a regular savings account could be the option you’re looking for.

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What is a regular savings account?

As the name suggests, a regular savings account involves setting money aside on a regular basis. So you pay money into the account every month, for a set period of time.

Both the amount of money and the time period required will vary depending on which provider you go with, but there are options where you can choose to save relatively small amounts (even as low as £1 a month).

Some people opt for this obligation to save money every month, as it’s a great way to build up savings at an affordable pace.

Another upside of these accounts is that they usually attract higher interest rates than both easy access savings accounts and notice savings accounts.

Are there any restrictions with a regular savings account?

Yes, the downside of a regular savings account is that during the set period, you usually can’t withdraw any of the funds that you have saved. (Although some providers will allow you to make a very limited number of withdrawals over a certain timeframe).

If you do take money out when the account conditions don’t allow you to or if you miss a regular savings payment, there will be financial penalties involved.

How to choose the best regular savings account

What turns out to be the “best” regular savings account for you will depend on your individual needs, so here are some pointers to consider before you choose one:

  • Access and management. Can you open the account online if would prefer not to visit a branch? And can you then view the balance and manage the account digitally?
  • Interest rate. This is a crucial factor to consider if you’re looking to generate a return on your savings (in addition to setting money aside), so research which provider is offering the best rate in the market.
  • Savings amount. You need to make sure the regular savings amount is affordable every month, so check what the minimum amount required is before you sign up.
  • Time period. As you won’t be able to withdraw your savings for a set period of time (or will only have very limited access), then be confident you can afford to tie your money up for the necessary timeframe.

Pros and cons of a regular savings account

Pros

  • The need to pay money in regularly will help build up your savings pot
  • The amount you are required to save each month can be very low
  • Interest rates on offer are usually better than for easy access and notice savings accounts

Cons

  • Have to make the regular savings pay-ins or you’ll face a penalty
  • Obligation to keep money locked in for a set period of time
  • Might not be able to access or withdraw any part of the savings balance without a penalty if you need it

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