What is a regular savings account?
Ideal for those who like to save little and often, a regular savings account allows you to build your savings on a regular basis. With this type of account, banks often require a commitment to pay money into the account each month.
A regular savings account typically offers a higher interest rate than both other savings accounts and standard current accounts with the interest being paid yearly. However, most banks will only offer regular savings accounts to their current account holders.
Find out more about The Co-operative Bank Regular Saver
How do regular savings accounts work?
How to open a regular savings account
What are the advantages of a regular savings account?
Making regular payments
When you have a regular savings account, you’re often required to pay a set amount of money into the account each month.
Accounts run on a fixed period
In most cases, regular savings accounts last for a fixed term, with either a variable or fixed interest rate. The most common term period is a year. Once the term ends, you are free to take your savings and the interest you have earned.
Better interest rates
A major benefit of these accounts is the interest you earn on your deposits. Compared to other types of savings accounts, regular savings accounts have some of the highest interest rates banks offer to customers. However, you're limited in the amount you can deposit.
Growing your pot
When you have a regular savings account, you’re expected to let the pot grow throughout the term period. The terms of the account encourage you to do this. It’s important to be aware of any restrictions associated with an account before you open it with a bank.
Limited access to money
During your term, you may be limited or not be allowed to make withdrawals. Accessing your money early may result in penalties, such as lower interest rates being applied or account closure. Before opening a regular savings account make sure you’ve checked the amount of access meets your needs.
Missed payments
Missing payments to a regular savings account may result in penalties, such as a lower interest rate or your account being closed.
Who are regular savings accounts for?
In most cases, regular savings accounts are perfect for people who want to get into a good habit of saving. Getting into this habit isn’t always easy, but regular savers can help build your discipline as making monthly deposits is a requirement.
You may be thinking of planning a special event or trip, such as a holiday or a wedding. A regular savings account offers you an easy way of building this money over a period of time. Even better, you’ll have something exciting to look forward to whilst you save.
However, you may simply wish to build a nice sum of money for yourself, whilst benefitting from the higher interest rates. Either way, discipline and patience are important qualities if you wish to open a regular savings account.
How much can I deposit into my regular savings account each month?
With a regular savings account, you’re often required to make a payment into the account each month. There will usually be requirements on:
- Minimum monthly deposits – if you can’t make a monthly payment then your account will potentially be penalised. This may come in the form of losing the higher interest rate that sets a regular saver aside from other types of savings accounts. Your account may also be closed. These penalties will be outlined in the terms and conditions when you open an account with the bank.
- Maximum monthly deposits – your account will likely also have a maximum monthly deposit. You will not be able to exceed this deposit amount in any month of your fixed term period.
How much interest can I earn with a regular savings account?
The interest rate on your regular savings account will either be fixed or variable. Your interest rates can go down, as well as up. A fixed interest rate will not change during the term of the account.
When figuring out the interest you can earn with a regular savings account, it’s important to note that interest is calculated daily. The interest rate is applied to the amount you have in your account at the end of each day, not the final lump sum that you have deposited.
For example; you open a regular savings account and deposit £100 per month over 12 months. At the end of the 12 months you’ll have £1,200 in your account before interest. However, you won’t earn interest on the £1,200 for the full 12 months. You’ll earn interest in the first month on £100, in the second month on £200, in the third month on £300 and so on until the end of the 12 month period. You’ll only have £1,200 in the account during the last month.
How will my savings be taxed?
Most people can earn some interest from their savings without paying tax. Thanks to the Personal Savings Allowance (PSA), if you are a basic rate taxpayer, you’re able to earn up to £1,000 interest on your savings before you will be taxed. If you are a higher-rate taxpayer, you can earn interest of up to £500 tax-free. However, additional rate taxpayers do not get a Personal Savings Allowance.
Any interest you earn which exceeds your allowance will be subject to income tax.
How to open a regular savings account
You can set up a regular savings account directly with a bank, either in-person, online or through a mobile app if available. Some accounts may be exclusively available online, while for others, you may need to visit a branch.
Find out more about The Co-operative Bank Regular Saver.
What are the advantages of a regular savings account?
A few of the advantages to using a regular savings account are:
- Higher interest rates – regular savers may offer you better interest rates than traditional instant access or fixed current accounts.
- Good saving habits – regular savings accounts are great for helping you get better at saving money, as putting money aside each month will become more natural to you.
Is my money safe in a regular savings account?
Your eligible deposits held by a UK establishment of The Co-operative Bank plc are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. This limit is applied to the total of any deposits you have with the following: The Co-operative Bank, Britannia and smile. Any total deposits you hold above the limit between these brands are unlikely to be covered.
How long will the interest rate be fixed for?
This will depend on if you are on a variable or fixed rate of interest.
A variable rate means it can go up or down. In most fixed rate cases, the interest rate on your regular savings account will last for either one or two years. After this period has ended your money and any interest earned will be available to you.
At The Co-operative Bank your account will convert into a Smart Saver, which is an instant access standard variable rate account.
Do I have to save each month?
Yes, you will be required to meet the minimum deposit amount for your regular savings account each month – this is set by the bank you hold your account with. If you fail to do this, you may lose out on your enhanced interest rates.
At The Co-operative Bank there is no minimum monthly deposit.
Am I allowed to close my account early?
This will be subject to the terms and conditions of the account. However, closing may result in a penalty to the account, typically in the form of a loss of interest and is something you should consider when deciding if it is the right account for you.
Other ways you can save with us
If a Regular Savings account isn't right for you, there are plenty of other ways to save with us.
Online Saver
2.65% gross / AER variable
An instant access account for existing customers who want to manage their savings online or through our mobile app.
Select Access Saver 2
Up to 4.09% gross / AER variable
A limited access account for those who want a higher interest rate if they don't withdraw, but have easy access to their money when they need it.
Co-operative Bank Fixed Term Deposit
Up to 4.53% gross / AER fixed (annually)
Monthly interest option available.
An account designed for those who want to lock away a lump sum for 1, 2 or 3 years, and earn a fixed rate of interest.
Savings terms explained
AER stands for Annual Equivalent Rate and shows what the interest rate would be if interest were paid and added to your account each year.
Business day is usually Monday to Friday excluding bank holidays.
Calendar month means from midnight on the first day of a month to 11.59:59pm on the last day of the month.
Fixed interest means the rate stays the same until the account matures.
Gross is the rate of interest payable before any tax is taken off.
Tax-free means you will not pay any tax on your interest.
Tax year runs from 6 April to 5 April.
Variable interest means that it could go up or down.
Please note: any reference to tax is based on our understanding of current tax regulations which may change in the future and depend on the customer's individual financial circumstances.
The Co-operative Bank reserves the right to decline or accept any application and/or deposit.
Financial Services Compensation Scheme
Your eligible deposits held by a UK establishment of The Co-operative Bank plc are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. This limit is applied to the total of any deposits you have with the following: The Co-operative Bank, Britannia and smile. Any total deposits you hold above the limit between these brands are unlikely to be covered.
Please read further information on the FSCS scheme here or visit their website.
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