Regular savings cash ISAs

This page covers regular savings ISAs, which are designed for savers who want to make regular, monthly deposits into an account to build up their savings pot. This type of ISA isn’t suitable for those who want to deposit a lump sum or want more flexibility in how they add to their savings; visit our main ISA chart to compare rates on ISAs that don’t specify a minimum monthly deposit.

What you need to know about regular savings ISAs: Benefits, limits and restrictions

Regular savings ISAs can help you build up a savings pot as they ask you to make a small deposit into the account each month. In return, you’ll earn tax-free interest on your savings.

Providers typically limit the amount you can save into these ISAs each month, which makes them particularly suitable for those who take a “little and often” approach to saving. And, because you’re restricted in how much you can save each year, it’s easy to ensure you don’t deposit more than your annual ISA allowance.

Just bear in mind that you may be required to make a set number of payments each year, and can be penalised if you miss a monthly deposit. This could be a loss of interest penalty, but in some cases could result in closure of the account.

Withdrawals may also be restricted and there can be opening restrictions as well (some accounts are only available to locals, for example), and you may be limited in how you can open and manage the account.

How is interest calculated on a regular savings ISA?

Because you’re drip-feeding money into a regular savings ISA on a monthly basis, rather than depositing a lump sum all at once, you may earn less interest overall than you were expecting.

For example, let’s say you pay £500 each month into a regular savings ISA that pays 3% AER (and interest is paid back into the account).

You would earn 3% interest on £500 in the first month, which would be approximately £1.25.

In the second month, you would receive interest on £1,001.25 (your two monthly deposits plus the interest already earned). This would be around £2.50.

In month three, you would earn interest on £1,503.75, which would be around £3.75.

After one year, you will have deposited £6,000 into the regular savings ISA and earned approximately £98.40 in interest overall.

On the other hand, if you had deposited a £6,000 lump sum into an account paying 3% AER, you would earn interest on the full amount from day one. This means you would earn approximately £180 in interest over one year, almost double the interest earned on the regular saver ISA.

Our monthly savings calculator can help you work out how much your money could be worth after making regular deposits over a certain period.

Regular saver ISA or regular savings account?

While cash ISA regular savers are a relatively niche product with not many accounts to choose from, standard regular savings accounts are more common. Both operate in the same way, as they typically require you to make a deposit each month to gradually build up your savings.

Because there are many more regular savings accounts to choose from, you may be more likely to find an account that best meets your requirements. Moreover, regular savings accounts can pay some of the most competitive rates on the market, with the best accounts likely to offer a much higher return than the leading regular savings ISAs.

However, the key advantage of a regular savings ISA is its tax-free status, with returns always free from tax regardless of how much you have saved. The Personal Savings Allowance (PSA) allows you to earn a certain amount of interest on your savings tax-free (the limit depends on your taxpayer status) but, if you think you could go over this limit, a regular savings ISA (or other type of ISA) is worth considering.

The tax benefits of ISAs depend on your personal circumstances and may change in the future.

How do I open a regular savings ISA?

Choosing the right account

To help you choose the right account, make sure you look at:

• the interest rate
• the monthly deposit requirements
• whether you can access your money or not
• how it can be managed as this affects how easy it is to use day-to-day
• the eligibility criteria.

Eligibility requirements

To be eligible for a regular savings ISA, you need to be a UK resident over the age of 18. Members of the armed forces or Crown servants who aren’t UK residents can also open an ISA, as can their spouse or civil partner.

However, some providers will have additional requirements to consider, so if you want to find out more about an account’s individual opening criteria, select ‘view further details’ next to each listing on the chart above.

Required information

When applying, you’ll need to provide personal details such as your name, address and National Insurance number. You should also make sure you have any documents that can verify your identity as providers may request this.

As regular savings ISAs usually require a minimum deposit each month, the provider could also ask for bank details for the account you wish to pay from. To avoid being caught out, it’s best to check what’s needed ahead of time.

Application process

The application process varies between accounts, including the method in which the account can be opened.

You can check to see an account's opening options to the right of each listing on the chart above.

No matter how the account can be opened, make sure to review each step of the process carefully to ensure there are no mistakes in your application. To help with this, each listing also displays any opening criteria and additional information to help you understand what is required.

Set up Direct Debits

When opening a regular savings ISA, some providers may suggest setting up a Direct Debit to automatically pay your deposit each month. While this can take away the stress of remembering to make a payment each month, it may be more difficult to change the amount you wish to pay later down the line.

Most accounts will allow you to set up a Direct Debit anytime, but it’s best to check with the provider.

Is there a minimum amount I need to open a regular savings ISA?

You’ll typically need a minimum deposit in order to open a regular savings ISA, usually ranging between £1 and £25. Keep in mind this initial investment amount tends to be the same as the minimum monthly deposit requirement.

How soon after opening a regular savings ISA can I pay into it?

This varies. Some accounts may allow you to make a deposit right away, while others could require you to set a specific date for your monthly payments.

How much can I save in a regular savings ISA?

Providers will typically limit the amount you can put into a regular savings ISA each month, which means you’ll only be able to deposit up to a certain sum in these accounts each year.

This maximum limit should be lower than your annual ISA allowance but, especially if you’re saving into any other ISAs, you should always be careful that your total ISA deposits don’t exceed this allowance.

Bear in mind that, if you save into a regular savings ISA for several years, some providers may limit the amount that you can hold in the account. Click “view further details” next to an account on our chart to check if a provider sets a maximum deposit limit.

Do I need to make a monthly payment?

Yes, a regular savings ISA requires a minimum deposit each month. While this can make it easy to build up your savings habits, make sure you can afford to set aside the minimum amount each month to avoid any potential penalties.

What happens if I miss a monthly deposit?

Some providers may allow you to miss a payment. However, you won’t typically be able to make a larger deposit the following month to make up for the missed payment.

Note that some providers may penalise you for not paying into the account, or for failing to meet the minimum monthly requirement. This could see you earning a smaller rate on your balance or could even cause account closure, or your balance being transferred to a different account type.

Can I withdraw money from my regular savings ISA at any time?

Regular saver ISAs typically allow you to access your savings, although providers may set their own individual limits on the number of penalty-free withdrawals you can make.

This penalty could be a loss of interest but can sometimes lead to account closure or your funds being transferred to another account type.

Can I transfer my regular savings ISA to another provider?

Yes, you can transfer all or part of your regular savings ISA to another provider whenever you like, without affecting your annual ISA allowance.

This can be to the same type of ISA or a different type, and includes any deposits made in the current or previous tax-years, though check with your provider to see if they have any restrictions on transferring.

Make sure you contact the provider you’re looking to move to, and they’ll let you know the next steps in the process. It’s important to avoid withdrawing funds yourself as this could impact your ISA allowance.