first direct launches regular saver at 7%

You’ll be able to save between £25 and £300 into this account per month.

From December 1 first direct will double the rate on its Regular Saver Account to a market-leading 7% AER. This means the increase will be the highest rate on offer since February 2013, when first direct offered 8% AER.

This regular savings account is available to those who hold first direct’s current account, otherwise known as a 1st Account.

As an added incentive you can earn £175 by using the Current Account Switching Service (CASS) to make this your primary account.  

If you already hold a Regular Saver Account, first direct will be passing on this increase to you too.

“One way to get into the habit of saving monthly would be to commit to a regular savings account, as these are designed for consumers to make frequent deposits,” said Rachel Springall, Finance Expert at Moneyfacts.

However, while the rate may seem attractive, it is important to remember how this account is structured.

The Regular Saver Account requires its users to save between £25 and £300 a month, which means the total you can deposit in its 12-month lifespan is £3,600.

As a result, the most interest you can earn from this account is £139.46 if the rate of 7.00% AER stays the same for the 12-month period.

“Regular savings accounts are more rigid than easy access accounts and harsh penalties can be applied if payments are missed or withdrawals are made, so they are most suitable for savers who need a strict savings plan and who wish to avoid dipping into their cash early,” Springall explained.

Indeed, withdrawals from the Regular Saver Account will result in account closure, so you should consider access to your cash carefully.

At the end of the 12 months from account opening, your Regular Saver Account will be closed and you’ll earn the interest rate on first direct’s Savings Account.   

To open your account you can apply online or via the mobile app. Once up and running, it can be managed via the telephone.

HSBC is set to up the rate on its regular savings account to 5% AER tomorrow.

This will be just lower than NatWest and the Royal Bank of Scotland’s regular savings accounts which offer a rate of 5.12% AER.

However, this is only paid on balances up to £1,000. After this the rate drops to 0.50% AER.

By contrast, HSBC will let you deposit up to £3,000 over the 12-month term.

You can compare other switching offers on the market by visiting our chart.