Halifax offers competitive 5.5% interest rate on savings account

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While the Bank of England Base Rate remains high at 4.25 percent, high street banks and building societies have been offering savers increasingly competitive interest rates. Halifax is currently offering regular savers a 5.5 percent annual equivalent rate (AER), and people can get started with just £25.

Regular savings accounts are a good option for people looking to start building up a savings pot.

These accounts typically offer higher interest rates and the terms generally encourage savers to pay money into the accounts monthly.

Savers just need to meet certain requirements on the respective accounts and they’ll earn interest on their savings on the basis they make minimal withdrawals and deposit regularly.

According to Halifax, its Regular Saver is “ideal” for savers who want to save between £25 and £250 every month by standing order or a bank transfer.

The money must reach the account by the 25th of every month and account holders must be UK residents who are aged 16 or over.

The 5.5 percent interest rate is applied on balances of £1 or more for 12 months from account opening.

The rate is applied to the balance after the 12-month term, after which any money saved including interest will be transferred into Halifax’s Everyday Saver Account. The Regular Saver will then renew and savings can start again via that account.

Withdrawals are not permitted within the 12-month term, however, the account can be closed prematurely.

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But while the Halifax Regular Saver is offering an appealing deal, this isn’t the highest rate available on the market for regular savings accounts.

According to the moneyfactscompare.co.uk Best Buys list, first direct’s Regular Saver is currently topping the list is offering an AER of seven percent on up to £3,600 per year.

Interest is calculated daily and paid on maturity of the account exactly one year after opening. Savers can deposit between £25 and £300 per month in multiples of £5.

Withdrawals are not permitted throughout the duration of the 12-month term. In the event of this, the account will have to close and interest will be paid up to the closure date at the Savings Account variable rate instead.

The savings account is currently only available to Current Account holders, but those who switch banks will be awarded a free £175 if they use the Current Account Switching Service (CASS) and deposit £1,000 within three months of opening.

NatWest’s Digital Regular Saver falls just behind with an AER of 6.17 percent.

The 6.17 percent interest rate is awarded to savings up to £5,000, after which a one percent rate will be applied to savings from £5,001 and over.

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There is no minimum deposit required to open the account and it allows people to save up to £150 each month. Unlimited withdrawals are permitted without penalty and interest is awarded monthly.

Placing third is Royal Bank of Scotland’s Digital Regular Saver, also with an AER of 6.17 percent.

Like NatWest, the same interest rules apply (6.17 percent paid up to £5,000, then one percent), interest is applied monthly, and unlimited withdrawals are also permitted.

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