Could you earn more interest by overhauling your savings habits?

Regular savings accounts currently pay the top rates on the market and can help you get into the habit of saving.

Anyone with money sitting in a current account or a savings account paying paltry returns could be missing out on a significant amount of interest.

For example, by depositing just £50 every month for a year into a leading regular savings account that pays 7.00% AER, you could end up with a savings pot of £623.24, according to analysis by Moneyfactscompare.co.uk.

If you can deposit £150 each month, your savings could earn over £69 in interest and be worth £1,869.73 at the end of one year, while anyone who can afford to put away £250 a month could earn approximately £116 in interest after one year to have a savings pot worth around £3,116.

Although some people may not think it’s worth building up a savings pot, or moving any of their existing savings, even a relatively simple action of opening a new savings account could make a major difference.

“Savers may find it convenient to stash their cash in their current account, but the stark reality is that these do not work hard enough to earn decent interest, nor do they really offer the right structure to instil the savings habit,” Rachel Springall, Finance Expert at Moneyfactscompare.co.uk pointed out.

“Consumers need to shake any apathy they have and take a step back to decide how their money could work harder for them, especially if they have future aspirations,” she urged.

Building a savings habit

If you’re not used to putting aside money for savings as part of your monthly budget, it can be difficult to get started and to build up a savings pot.

Regular savings accounts may be particularly useful for anyone wanting to get into the habit of saving as they require you to deposit a sum of money into savings every month.

Just as importantly, they also currently offer some of the most competitive interest rates on the market.

Providers usually set a minimum and maximum sum you can deposit each month. While this can encourage savers to continue adding to their savings, it does mean there’s a limit on the amount you can deposit in total (and so the amount of interest you can earn).

Some accounts may also prevent you from accessing your money for the 12 months that you make deposits.

But, despite these restrictions, regular savings accounts are still worth considering.

Regular savings accounts with a fixed term “define a clear target for savers building a pot, such as those who may want to put cash aside for Christmas,” Springall noted.

“Those who have struggled to save this year could kick-start the habit for 2025 and can then rely less on short-term credit to cover festivities,” she added.

The leading rate on regular savings accounts stands at 8.00% AER, thanks to the 6 Month Regular Saver from Principality BS. Savers can deposit between £1 and £200 a month in this account.

Alternatively, Principality BS also offers a Christmas 2025 Regular Saver which pays a fixed rate of 7.00% AER on monthly deposits between £1 and £125. With the money locked away for 12 months, this could help savers build up a savings pot that’s ready to spend on presents and other Christmas-related costs next year.

The Co-operative Bank and first direct also pay 7.00% AER on their regular savings accounts.

Take action

Recent data from the Bank of England found that around £252 billion deposited with banks and building societies was earning little to no interest.

This means that inflation is eating away at this money, when it could be earning inflation-beating returns in top-paying savings accounts and growing in real terms.

“Consumers debating whether to start a savings pot should act now, it is never too late to overhaul their usual habits. Taking just one step can mean all the difference to set out a secure path to feel more in charge of their financial wellbeing,” Springall explained.

“Building an emergency fund or saving for a specific goal is simple and easy to do and there are plenty of accounts designed for various needs,” she added.

For example, easy access accounts may be a good starting point as many allow you to add to your savings and withdraw as often as you like. However, if you think you may be tempted to dip into your savings, a notice account could be more suitable as you need to wait a set period of time before you can access your money.

Alternatively, if you have a lump sum of money sitting in a low-paying account, you could consider locking it away in a fixed rate bond with a higher rate of interest.

Whatever type of savings account you choose, it’s important to compare different options so you can take advantage of the most competitive interest rates.

By checking that your savings are continuing to earn the best rate of interest, and switching accounts if there are better options available, you can maximise the return you get on your money.