first direct to hike regular saver rate to 3.5% - how does it compare?

Savers are encouraged to consider other options before making a final decision.

Moneyfacts award-winning challenger bank, first direct, will increase its regular saver account rate to 3.50%. However, those interested in the offer should consider the competition.

“The majority of regular savings accounts on the market are either exclusive to new or existing current account customers or have some kind of eligibility criteria, so savers will need to compare deals carefully before they apply,” said Rachel Springall, Finance Expert at Moneyfacts.

To open first direct’s regular saver account, customers are required to open a first direct current account (1st Account) and deposit a minimum of £25. The offer will also only be available from next Thursday.    

“Customers can pay in up to £300 per month, totalling £3,600 a year. Those whose monthly payments are less than £300 have the option to carry the allowance forward from previous months,” first direct said in a press release.

However, as an incentive, new customers switching to a first direct current account will receive a £150 Current Account Switch Service (CASS) switching incentive.

While this makes switching seem “a tempting offer”, there are multiple factors to consider before switching current account provider, said Springall.

Those considering a regular savings account need to consider how much flexibility they require in their savings.

While the rate on a regular savings account may look more lucrative, it often comes with further restrictions which would not be included in an easy access account. Furthermore, interest is calculated differently with only the first payment receiving the full annual rate of 3.50%. 

Restrictions may include withdrawal and deposit limits. In addition, if you cannot commit to a regular savings contribution, then some regular savings accounts may charge you a penalty fee.

The current best easy access rate on the market, from Chase, stands at 1.50%. Other competitor deals can be found on our charts. 

Strictly speaking, the best regular savings account rate on the market is 5%. This is offered by Cambridge Building Society and is only available to existing customers who have held an account for at least three years.

In addition, it is important to note that this is offered on a fixed-term basis, which means you are required to make a minimum regular deposit without incurring any penalties.

In addition, Bath Building Society also offers a rate of 4.15%, which beats the first direct offer. However, this is only open to residents in Bath between the ages of 16 and 25.

Compared to the high street offers, first direct’s new rate will beat NatWest’s regular savings account at 3.25%. For this account, the rate will drop to 0.30% for amounts over £2,500.

To find more information on these regular savings offers, visit our table here.