Regular Savings accounts offer some of the highest rates of interest on the market. However, the headline rate of interest advertised comes with several conditions. Here we look at the rules commonly governing the typical Regular Savings account, and the implications of these stipulations.

Regular Savings are a type of savings account that generally offer the some of the highest rates of interest available on the market if you are able to meet the condition of making regular minimum monthly payments. Regular Savings accounts are routinely advertised by the banks, as the headline rate of interest usually exceeds that which is offered by other forms of savings accounts, such as instant access and cash ISA accounts – and so Regular Savings provide eye catching publicity for the bank. The advertised top rate of interest for Regular Savings usually applies for an initial period, which is typically up to around 12 months – after which the interest that you’ll receive on regular savings commonly drops significantly, or the money is transferred to a less competitive standard savings account.

Aside the minimum monthly payment, there are often other stipulations attached to Regular Savings if you want to receive the high interest advertised, such as a limit on withdrawals, and an upper limit to the amount that you can put into Regular Savings at one time.

It is important to note how the interest payments work with Regular Savings, the crucial point being that the money is being deposited month by month, and not in one lump sum. The interest you receive will work out to around half the advertised rate, as when the Regular Savings account is opened, there will only be a small sum in the account in the first few months. To get the most out of Regular Savings accounts, you should initially deposit as much into the account as you are allowed - as long as you make sure that you’ll have enough left to make the minimum monthly payments. Failure to make these payments into your Regular Savings will at the very least result in you earning a much reduced rate of interest for that month.

Perhaps the best way to use Regular Savings accounts is to arrange the automatic transfer of money into the account each month – at least the minimum required, and as much as you can afford up to the specified maximum. If you have a lump sum that you wish to save, and are thinking of using Regular Savings, a good technique is to open a standard savings with the best rate of interest that you can find for the lump sum, and then ‘feed’ the Regular Savings account from the standard account monthly. This way, the lump sum earns as much interest as possible in the standard savings account, while you put as much as you can into the high interest Regular Savings each month. Some Regular Savings accounts require the deposit to be made from a current account, and in this case you may need to first move the money from standard savings to your current account, before depositing in your Regular Savings.