A MAJOR building society with three million customers has launched a savings account paying out 8% interest, making it one of the best deals on the market.
Yorkshire Building Society (YBS) has launched a new regular savings account which lets customers deposit up to £50 per month.
Regular savings accounts usually require you to put in a certain amount of money each month and can come with withdrawal limits, but often with higher interest rates too.
YBS’ new regular saver comes with a variable interest rate of 8% on a 12-month term, which means it could go up or down over the year period.
One perk of the account is that there is no minimum monthly deposit, as is often the case with regular savings accounts.
But, if you started with nothing, added the maximum of £50 a month (starting from October 1) at 8% for 12 months and made no withdrawals, you would make £26.01 on top of your £600 – £626.01 overall.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “As the past few years have demonstrated, having an emergency fund by saving a bit of money each month can make a huge difference.
“Regular savings accounts encourage the savings habit and give consumers the chance to build a nest egg for a specific goal or to fall back on in difficult times.”
You can only withdraw a maximum of three times from the YBS savings account across its 12-month term.
For security reasons, you cannot withdraw money for the first 14 days after opening the account.
You must also be a UK resident and 16 or over to open the account and cannot add money from another account with Yorkshire or Chelsea Building Society.
You can also only open one of the accounts and any applications must be done via YBS’ website.
Chris Irwin, director of savings at YBS, said the building society is keen to help savers “kick-start” a healthy savings habit and put aside money that will help “build a financial safety net”.
Moneyfactscompare.co.uk said Principality Building Society is the only other bank or building society offering a regular savings account at 8%, however the interest is based on a six-month term.
It said the Co-operative Bank’s regular savings account is the next best option, offering a 7% interest rate for a year.
That means, based on a 12-month term, YBS’ latest deal is the best of its kind on the market.
However, it might be worth choosing another regular savings account if you are looking to save more than £50 each month, as you will make more in interest over the term.
For example, Moneyfactscompare.co.uk said the maximum you can save with YBS is £600 over 12 months whereas Co-op Bank’s account lets you stash away £3,000 a year at 7%.
Based on adding £50 a month to the YBS account for 12 months, you would make £26.01 in interest.
But by putting the full £3,000 a year into the Co-op Bank account, you would make £113 in interest over the same period.
Meanwhile, you can put up to £200 a month into the Principality Building Society 8% regular saver for six months which pays out £27 in interest in half the time.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said one major perk to the YBS regular savings account is that those aged 16 or over can open one, as is the case with the Co-operative Bank and Principality Building Society savings accounts.
Some banks and building societies don’t let you open an account unless you are 18 or older.
However, Sarah added on the YBS account: “The rate is pretty impressive. If you’re starting out on a savings journey, it’s the most generous one-year regular savings account around.”
There are a number of different savings accounts available to suit all needs.
Easy access savings accounts are the most flexible type with most letting you make as many deposits and withdrawals as you want.
They can be useful if you want to dip in and out of your savings on a regular basis while still building up a nest egg.
However, all easy access savings accounts pay a variable rate of interest which can go up or down.
Fixed-rate bonds typically pay higher rates than easy access accounts as you agree to lock away your money for a specific period.
The interest rate you agree is fixed until the end of the term, although you can usually only deposit into the account for a limited period after opening it and won’t normally be able to access your savings until the end of the term.
There are also regular savings accounts which, usually, involve you having to deposit a minimum amount of money in each month.
They also sometimes come with restrictions on how many times you can withdraw from them over the duration of the term.
According to Moneyfactscompare.co.uk, as of September 11, the best rate you can currently get on an easy access savings account is 4.85% with Raisin.
Meanwhile, the best rate for a fixed term bond is 5.23% with GB Bank which comes with a six-month term.
Remember, to always search around for the best rates and do it regularly as they often change.
Moneyfactscompare, Compare the Market, Go Compare and MoneySupermarket can help you find the best rates.
These sites let you tailor your searches to an account type that suits your needs best.
The latest move from YBS comes after a number of banks and building societies slashed rates across savings accounts.
Last month, Chip cut the rate of its variable rate cash ISA from 5.1% to 4.84% following the Bank of England’s decision to cut the base rate from 5.25% to 5%.
Cash ISAs let you save up to £20,000 into one account per year without paying tax on any interest.
The Co-operative Bank also made a swathe of interest rate cuts across its saving products with its easy-access Base Rate Tracker account falling by up to 0.75%.
Its easy-access Base Rate Tracker savings accounts fluctuate based on whether the BoE’s base rate goes up or down.
Whether savings rates across the board will fall further could depend on whether the BoE decides to lower, decrease or keep the base rate the same when it meets next Thursday.
However, the International Monetary Fund (IMF), has previously recommended interest rates are cut to 3.5% by the end of 2025.
Meanwhile, the British Chambers of Commerce, which represents businesses, has forecast the rate to fall to 4.75% by the end of this year.
That would see savings rates fall further, so now may be a good time to lock in a rate on a savings account.
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what’s out there.
These websites let you tailor your searches to an account type that suits you.
There are three types of savings accounts fixed, easy access, and regular saver.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
An easy-access account does what it says on the tin and usually allow unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
Lastly is a regular saver account, these accounts generate decent returns but only on the basis that you pay a set amount in each month.
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