Zopa, the digital bank, is now offering an impressive 7.10% Annual Equivalent Rate (AER) on its regular savings account.
Regularsavings accounts are best suited for individuals who are trying to save a fixed amount each month over a specified term, usually 12 months, and earn interest. This particular Zopa account allows savers to deposit up to £300 each month, with a total maximum deposit of £3,600 over 12 months.
At the specified rate, a max £3,600 deposit would earn around an estimated £137 in interest, bringing the total account balance to approximately £3,737 at the end of the term.
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There is no minimum deposit needed to open the Regular Saver account, but customers must have a Zopa bank account and a Smart Saver account first, the latter requiring a minimum deposit of just £1.
After the 12-month term, the account immediately converts to an Easy Access account which has a 3.5% rate, although customers can then just open a new Regular Saver account to continue earning the higher rate.
Unlike most other typical savings accounts, Zopa's offer permits withdrawals at any time without penalty. That said, any money withdrawn can only be replaced up to the monthly limit of £300.
For instance, if you withdraw £500, you can only redeposit £300 for the remainder of the month. To open this account, applicants must be 18 or over, UK residents, and have both the Zopa bank and Smart Saver accounts.
What else is out there?
Despite the Bank of England's latest Base Rate cut to 4%, savers can still reap the benefits of higher interest rates. Principality Building Society is leading the pack for regular savers with an AER of 7.5%. The account runs for six months, and interest is paid upon maturity.
Savers can invest up to £200 per month, which means the pot can increase to a total of £1,200, and withdrawals are not permissible until the account matures.
With a maximum monthly investment of £200, savers could see a final balance of £1,227.53, including £27.53 in interest. So, while it may have a market-leading AER, the six-month term limits the total interest earned.
First Direct offers another impressive 7% AER over 12 months. The account allows a higher monthly deposit of £300, which totals up to £3,600 in savings over the course of a year, reports the Express.
At the end of the 12-month term, customers will have £3,736.50, including £136.50 in interest. Although First Direct's interest rate is somewhat lower, the longer term and higher deposit limit make it a potentially superior option for earning larger savings.
Other providers offering competitive interest rates on regular accounts include The Co-Operative Bank with a 7% AER, Nationwide Building Society with a 6.5% AER, and Lloyds Bank with a 6.25% AER on its Club Lloyds account.
