A regular saver pays interest on money you pay in each month, up to a monthly limit, for a fixed term. They often advertise the highest rates of any savings account. The catch is in how the interest is worked out: the rate applies to a balance that starts at one month’s deposit and builds up, so the interest in pounds is much less than the rate suggests.
What you actually earn
Each deposit earns interest only from the day it goes in. Over a 12-month term, the first deposit earns interest for 12 months, the second for 11, and so on down to the last, which earns interest for one month. Added up, 12 + 11 + … + 1 = 78 months of interest on one deposit, the same as one deposit earning interest for 78 ÷ 12 = 6.5 months.
Worked example. You pay £200 on the first day of each month into a regular saver paying 6% (an example rate), with interest paid at the end of the year:
- You pay in £2,400 over the year.
- Interest: £200 × 6% × 6.5 = about £78.
- That’s 3.25% of what you paid in, a little over half the 6% headline rate.
The same £200 a month kept in an account paying the August 2026 average instant access rate of 2.07% would have earned about £26.91. So a regular saver is well worth having for money you’re saving from income anyway: just don’t expect the headline rate on your total.
To see how monthly saving grows over longer periods, use the compound interest calculator.
The conditions to check
Regular savers often come with more rules than other savings accounts. Check the account’s terms for:
- The monthly limit, and whether there’s a minimum.
- Missed months: whether you can skip a month, or catch up by paying in more later.
- Withdrawals: how many you can make during the term, and whether withdrawing cuts the rate or closes the account.
- Who can open one. Some are only for customers who hold the bank’s current account.
- The term, and what happens at the end (below).
When the term ends
At the end of the term the account’s terms say what happens to the money: often it moves into another of the bank’s accounts, which may pay less. Before the term ends, decide where the balance goes next: an easy access account if you’ll need it, a fixed rate bond if you won’t, and a new regular saver for next year’s monthly saving.
Tax
Regular saver interest counts towards your Personal Savings Allowance, like interest from any other savings account outside an ISA. Because the balances are small, most regular savers on their own won’t take you over it.
Related guides
- Savings accounts guide: the account types, average rates, tax and protection in one place
- How to find the best savings account: the benchmark and checks for any account
- Compound interest calculator: monthly saving over longer periods
- Saving for a child: children’s regular savers and Junior ISAs