But gap between best and worst is a massive 10.1 per cent, says MoneyExpert.com
Regular savings accounts are booming in the credit crunch with average interest rates climbing to 5.25 per cent compared with 4.23 per cent in January 2007 when the base rate was 0.25 per cent higher than now, analysis by MoneyExpert.com shows.
The number of regular savings accounts on the market soared from 82 in January 2007 to around 107 now as banks and building societies have sought to pull in more cash from savers to compensate from the loss of money markets funding.
But despite the climb in average rates and the increase in firms competing for regular savers’ cash the gap between the best and worst is an incredible 10.1 per cent, the independent financial comparison website says.
Regular savers can benefit from rates as high as 12 per cent with Alliance & Leicester’s Premier Regular Saver or suffer rates as low as 1.9 per cent on balances below £500 with NatWest’s First Home Saver. Other low-paying accounts include Triodos Bank’s Regular Saver at 3.12 per cent.
MoneyExpert.com is urging savers to ditch poorly-performing regular savings accounts but warns customers to watch out for any penalties before switching. Most regular savings accounts impose penalties for withdrawing cash during the first 12 months.
Sean Gardner, director at MoneyExpert.com, said: "Every cloud has a silver lining and the credit crunch clouds have at least helped deliver better deals for savers – or at least those who can afford to save."
"It is striking that average rates on regular savings accounts are around one per cent better than they were 18 months ago when the Bank of England base rate was actually higher than it is today."
"Anyone committing to regular savings deserves a good deal from their bank or building society so it is disappointing that there are still some dismal accounts out there."
Most regular savings accounts insist on customers signing up for at least 12 months and most set limits on how much you can save into the account over the year. The Alliance & Leicester account paying 12 per cent limits customers to a maximum £250 a month – anyone doing that for a year would earn £195 in interest.
Other high-paying accounts include Abbey’s Super Monthly Saver, Halifax’s Regular Saver and HSBC’s Regular Saver which all pay 10 per cent.