NatWest hikes regular savings account to 5%

The high-street bank also launches a £175 switching incentive for its current account. 

NatWest increased the rate on its regular savings account to 5% today, up from the 3.75% previously on offer.

The Digital Regular Saver pays 5% gross (5.12% AER) on balances between a single pound and £1,000. If this is figure is exceeded, but below £5,000, then the provider will drop its rate to 0.50% AER. Any balances greater than £5,000 will revert to a 0.40% AER.

As a regular savings account requires a monthly addition, NatWest customers can add as little as £1 to their funds per month. The most they can deposit each month into their savings stands at £150.

“It’s worth keeping in mind that a regular savings account works differently to a traditional easy access account, but they could be the perfect choice for savers who want to commit to putting some cash away every month towards a specific goal,” said Rachel Springall, Finance Expert at Moneyfacts.

Unlike an easy access account, interest on a regular savings account is earned on the monthly deposits and not the lump sum amounts. So, in this example, the full 5% rate will only be applied to the first monthly deposit up to £150.

As a comparison, the top easy access rate on the market stands at 2.10% AER from Al Rayan Bank.

In order to open the Digital Regular Saver, savers are required to open a NatWest current account.

As an incentive to making this a primary current account, new and existing customers can benefit from a £175 switching incentive.

This process can be completed through the Current Account Switching Service (CASS)

The Digital Regular Saver, meanwhile, can be opened online or via the mobile app, which gives it an edge when compared to other restrictive regular savings accounts, explained Springall.

“Most of the top interest paying regular savings accounts available today are for existing customers or locals, available by post or by applying in branch, so savers would be wise to compare the terms carefully to see what is available to them,” she explained.

The Digital Regular Saver and its rate of 5% AER is also available through the same means via the Royal Bank of Scotland.

In April, first direct also upped the rate on its regular savings account to 3.5% AER. This rate still stands and is the second-best offer on our table.

It is, however, only available to customers who open a first direct current account (1st account). This current account also has a switching incentive of £175.

While its rate might be less than NatWest, it does facilitate a greater total monthly payment of £300 or annual payment of £3,600.

However, early access to these funds will result in account closure with a reduced interest rate applying meaning savers are encouraged to keep their investment throughout the account’s term.

After 12 months, the Regular Saver will revert to an Everyday e-Saver or Savings Account.