Lloyds Bank is offering savers a competitive 6.25% interest rate on its regular savings account.
The Club Lloyds Monthly Saver allows customers to deposit between £25 and £400 each month for 12 months, with a maximum total contribution of £4,800. At the current rate, someone saving the full monthly limit could earn around £150 in interest over the year. The rate is fixed for 12 months.
The account is open only to Club Lloyds current account holders aged 18 or over who have not held the product in the past year.
Savers can withdraw funds at any time without penalty, setting the account apart from other similar accounts. Only one account is available per person, either individually or jointly.
Regular savings accounts typically require people to deposit a set amount each month and make minimal to no withdrawals. They work well for disciplined savers who want to build their savings over time and benefit from higher interest rates than standard accounts.
Club Lloyds is a current account from Lloyds Bank that offers a combination of lifestyle benefits, preferential savings and travel money rates, and other perks in exchange for a monthly fee of £5. The £5 fee is refunded each month that you pay in £2,000 or more.
How does the account compare?
Savers can still benefit from higher interest rates despite the Bank of England’s latest Base Rate cut to 4% last month.
For those who don’t have a Club Lloyds current account and want to open a regular savings account, Principality Building Society offers the top rate of 7.5% Annual Equivalent Rate (AER). The account runs for six months, and interest is paid on maturity. People can save up to £200 per month in the account, allowing the pot to grow to a total of £1,200. With a maximum investment of £200 per month, savers will end up with £1,227.53, including £27.53 in interest. Withdrawals are not permitted until the account matures.
Zopa offers a 7.1% AER over 12 months with a maximum limit of £300 per month, allowing savers to build £3,600 in total savings. Interest is paid at the end of the term, with a full £3,600 deposit expected to earn around £137. This will bring the total balance to approximately £3,737. Savers are allowed to withdraw money from the Zopa savings account at any time without penalty.
First Direct is also offering a competitive interest rate on its regular saver with a 7% AER over 12 months. The account allows a higher deposit of £300 per month, which totals up to £3,600 in savings over the course of a year.
At the end of the term, savers will have £3,736.50, including £136.50 in interest. With this account, savers must feel confident they won’t need to dip into their pot, as withdrawals are not allowed until the term matures.
New data from Moneyfacts shows that only a quarter of savings accounts (26%) currently beat the Bank of England’s Base Rate, making it key for savers to review their accounts and switch if loyalty isn’t paying.
Rachel Springall, finance expert at Moneyfacts, said: “The majority of savings accounts fail to beat the Bank of England Base Rate. As inflation is expected to climb higher, this means the vast majority of savers will see their pots eroded in real terms. This will be incredibly demoralising for savers who use their interest to supplement their income.”
Ms Springall added: “Savings providers typically offer more attractive returns to savers who are prepared to lock their cash away for an agreed time, such as with a fixed rate bond or notice account, and less so for accounts where the cash could be instantly withdrawn.
“Locking into a guaranteed return with a fixed bond amid tumbling variable rates is wise, but savers must be aware of their Personal Savings Allowance (PSA), which in itself, could be reviewed or abolished in the future by the Government.”
