Lloyds Bank offers market-leading savings account paying 8.00% AER

Available to new and existing customers, the Lloyds Bank Monthly Saver joins Santander in offering the highest savings rate on the market.

Savers with a Lloyds Bank or Bank of Scotland current account could earn a market-leading 8.00% AER on their savings after these high street brands raised rates.

The Lloyds Bank Monthly Saver is available to those who have or open a current account with the bank, including its fee-free Classic account and its Club Lloyds accounts (which charge a monthly fee in exchange for a range of perks). Those with a Bank of Scotland current account can open the Bank of Scotland Monthly Saver.

These Monthly Savers pay a fixed rate of interest for 12 months, which means savers are guaranteed to receive 8.00% AER for this period; there’s no risk that the rate will drop.

Savers will need to deposit a minimum of £25 into these accounts each month, up to a maximum of £250, which means the total amount they can add to their account over the 12-month period is capped at £3,000.

While savers will get the best return on their money by not making any withdrawals from their Monthly Saver, they have the option to dip into their funds whenever they choose if they need to access any of their savings.

Assuming a saver deposits the maximum amount in the account and doesn’t withdraw any money, they could earn around £120 over one year.

“Lloyds Bank has entered the regular savings market with a highly attractive Monthly Saver paying a market-leading 8.00% AER fixed for 12 months, making it an eye-catching choice for customers looking to steadily build a savings pot,” Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, commented.

She explains that it rewards “those who commit to a regular savings habit” but, because it allows withdrawals, it can also “provide valuable peace of mind for savers who may need to dip into their pot in an emergency”.

Note that any customers who have opened another Lloyds Monthly Saver within the past 12 months won’t be eligible for this headline rate.

Is it worth opening a Monthly Saver?

If eligible customers of Lloyds Bank or Bank of Scotland can afford to put aside at least £25 into savings each month, a Monthly Saver is worth considering as it pays the highest rate on the market.

However, savers may also be interested in Santander’s Regular Saver that pays the same 8.00% AER, although this includes a hefty 5.00% AER 12-month bonus and only allows customers to deposit a maximum of £200 each month. Furthermore, as the interest rate on this account is variable, the amount earned could go up or down.

This account is available to new and existing Santander customers and, unlike Lloyds Bank, it doesn’t specify a minimum monthly deposit.

“It is really positive to see another major high street bank offering a competitive regular savings deal, especially if savers are looking for ways to boost their financial resilience. Saving little and often can be a great way to prepare for unexpected costs, build an emergency fund or work towards future goals,” Springall explained.

“However, while the headline rate is undoubtedly attractive, consumers should remember that regular savers limit monthly deposits, meaning they may not be suitable for those with larger lump sums to invest,” she warned.

Savers wanting an account with more flexibility may be interested in an easy access account or a notice account, while those wanting to lock away a lump sum in return for a guaranteed interest rate could search for a competitive fixed bond.