Today, Principality Building Society has launched a new regular savings account. The Learner Earner account consists of an adult and child version, both pay 4% yearly and must be opened together. Savers should note that the interest rate is variable so could change in the future.
You can save up to £250 per month into each version and the maximum balance is £20,000 for both accounts. Unlike many other regular savers, you are not restricted to a fixed 12-month term and can continue to build your savings until you reach the maximum balance of £20,000. To reach this total, it would take nearly six years paying in £250 per month, while the account can be opened from an investment of just £1.
The account can only be opened in a Principality Building Society branch, although once opened it can also be operated by post too. You will need to have a close link to the child opening the account, such as being a parent, grandparent, aunt, uncle or guardian.
This account would generate £1598.92 in interest over five years if £250 per month is paid in and the interest rate remains at 4%. To achieve this figure, you must have the annual interest compounded and not make any withdrawals.
Yes, you can find rates up to 5% for regular savings accounts, however they may not give you the most in actual interest. At the moment, first direct’s Regular Saver Account offers a fixed rate of 5% on a 12-month term, where interest is paid on maturity. This would generate £80.64 per year in interest, if you paid in £250 per month. If you opened one every year for five years, you would earn £403.20 in total interest.
The best rate currently available of 5% for a regular savings account is offered by first direct, HSBC and M&S Bank. These are all 12-month fixed bonds that are restricted to existing customers, do not allow withdrawals and as shown, do not always earn you the most in actual interest over time.
The Learner Earner from Principality Building Society has the second-best rate in our regular savings table at 4% but has more in actual interest-earning potential and comes with the flexibility of three withdrawals per year. Meanwhile, Saffron Building Society offers a rate of 3.50% on a 12-month fixed regular savings account with no limits on withdrawals, but the maximum monthly payment at £200 is the lowest of the accounts mentioned so far. New customers must open this account in a Saffron Building Society branch.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.