Stock markets are in freefall. The FTSE 100 dropped over 8% this morning. Oil prices have cratered. The word "recession" is all over the financial press.
If you've got money in the stock market right now, you're probably feeling a bit sick. And if you've been thinking about investing but haven't started yet, you're probably thinking: "Thank god I waited."
Here's the thing — there's a corner of the savings world that doesn't care what markets are doing. Regular saver accounts pay guaranteed interest rates, your money is protected by the FSCS up to £85,000, and you cannot lose a penny. In a week like this, that sounds rather appealing.
Let me walk you through exactly how they work, who should use them, and how to squeeze the most from them.
What is a regular saver account?
A regular saver is a savings account where you deposit a fixed amount each month — typically between £25 and £300 — for a set period, usually 12 months. In return, the bank pays you a higher interest rate than you'd get from a standard savings account.
Right now, the best regular savers are paying 5% AER. That's not spectacular compared to a few years ago (some were paying 6-7% not long ago), but it's significantly better than the 1-1.5% you'll find on most easy-access savings accounts in March 2020.
The catch? There's always a catch. Most of the best regular savers require you to hold a current account with the same bank. And there are usually restrictions on withdrawals — pull your money out early and you'll either lose the bonus rate or close the account entirely.
But if you can commit to drip-feeding money in each month and leaving it alone for a year, you've got yourself a guaranteed return. No market risk. No complexity. Just a standing order and some patience.
Why regular savers matter right now
Let's be honest about what's happening in March 2020. Coronavirus is spreading across Europe. Markets are panicking. The Bank of England is widely expected to cut the base rate — possibly as soon as this week — which will drag savings rates down further.
When the base rate drops, easy-access savings rates follow almost immediately. But regular saver rates tend to be stickier. Banks use them as loss leaders to attract customers, so they're slower to cut. If you open a regular saver today at 5%, that rate is typically fixed for the 12-month term regardless of what the Bank of England does next.
This is genuinely important. If the base rate drops from 0.75% to 0.25% (or lower), having a chunk of your savings locked into a 5% regular saver will look increasingly smart as the months go on.
The other reason regular savers matter right now is psychological. When everything feels uncertain, having at least some of your money in a guaranteed, FSCS-protected account provides a level of calm that no volatile investment can match. You know exactly what you'll earn. You know your capital is safe. That peace of mind has real value.
How much do you actually earn?
Here's where regular savers get a bit confusing, and where banks are slightly sneaky with their advertising.
A regular saver paying 5% AER does not mean you earn 5% on all your money. Because you're depositing monthly, your first month's deposit earns interest for 12 months, but your last month's deposit only earns interest for one month. On average, your money is only in the account for about half the term.
A practical example:
Say you're putting £250 a month into a 5% regular saver for 12 months:
- Total deposited: £3,000
- Interest you might expect (5% × £3,000): £150
- Interest you actually earn: roughly £81
- Effective rate on your total contributions: about 2.7%
£81 isn't life-changing. But it's guaranteed, it's risk-free, and it's significantly more than the £30-£45 you'd earn in an easy-access account at 1-1.5%. And crucially, it requires almost zero effort once you've set it up.
If you can run two or three regular savers simultaneously — which is entirely possible if you hold the right current accounts — you can deploy more money at these above-market rates.
Who can open a regular saver?
This is the key question, because the answer determines your strategy.
Linked regular savers (best rates): The top-paying regular savers are almost always linked to a specific current account. Nationwide's FlexDirect account, for example, comes with a regular saver paying 5% AER. First Direct offers one too. To access these, you need to hold (or switch to) the linked current account.
Standalone regular savers (no current account needed): Several building societies offer regular savers that anyone can open. The rates are usually a touch lower — perhaps 3-4% — but there's no requirement to switch your banking. These are good if you want a risk-free return without any upheaval.
The smart approach: If you're already considering bank switching for the cash bonuses, choose banks that offer both a switch bonus and a good regular saver. You get paid twice — once for switching, and then ongoing interest on top.
For instance, Nationwide's FlexDirect currently offers a 5% AER in-credit interest rate on balances up to £2,500, plus access to their regular saver. If you switch to them via the switching guide, you collect the bonus and unlock the regular saver in one move.
First Direct is another strong option — they're currently offering a £100 switch bonus, and their current account comes with access to a regular saver. That's £100 upfront plus the regular saver interest over the following year.
A step-by-step strategy for maximising regular saver returns
Here's what I'd do if I were starting from scratch today:
Step 1: Check what you already have
Log into every current account you hold and check whether it comes with a regular saver you haven't opened yet. Many people are sitting on regular saver access without realising it. If your bank offers one and you're not using it, set up a standing order today.
Step 2: Switch to unlock the best rates
If you don't currently hold accounts with the banks offering the best regular savers, use the Current Account Switch Service to move. It takes seven working days and all your payments transfer automatically.
Use our eligibility checker to see which switches you qualify for, then pick the bank with the best combination of switch bonus plus regular saver rate.
Step 3: Set up standing orders on payday
The day your salary lands, have standing orders automatically move money into your regular saver(s). This removes any temptation to spend it and ensures you never miss a month. Missing a payment doesn't usually close the account, but it does mean less money earning that higher rate.
Step 4: Don't touch it
Seriously. The most common mistake with regular savers is withdrawing early. Most accounts will either slash your rate to something pitiful or close the account entirely if you make a withdrawal. Only put in money you genuinely won't need for 12 months.
Step 5: Diary the maturity date
When your regular saver matures after 12 months, most banks will quietly move your money into a standard savings account paying next to nothing. Set a reminder for month 11 so you can decide what to do — open a new regular saver, move the money to the best easy-access account, or redeploy it into another strategy like stoozing.
Combining regular savers with other strategies
Regular savers are brilliant, but they're even better when they're part of a broader approach:
Regular savers + bank switching: Switch to a bank, collect the cash bonus, open the regular saver. When the 12-month term ends, switch to the next bank and repeat. Check the live offers page for the current best deals.
Regular savers + stoozing: If you're using a 0% credit card for everyday spending (which frees up your actual cash), you can funnel that freed-up money directly into regular savers. Instead of your salary going out on groceries and bills, it goes into accounts earning 5%. The credit card covers the spending at 0% interest. This is the core of the stoozing strategy, and regular savers are the perfect destination for stoozing proceeds.
Regular savers + easy-access savings: Keep your emergency fund in the best easy-access account you can find. Everything above your emergency fund threshold gets drip-fed into regular savers. You maintain liquidity for genuine emergencies while your longer-term savings work harder.
The risks (such as they are)
I said "zero risk" in the title, and that's almost true. Let me be precise:
Your capital is safe. Regular savers are covered by the Financial Services Compensation Scheme up to £85,000 per banking group. You will not lose money.
The interest rate is fixed for the term (in most cases). Even if the Bank of England cuts rates to zero, your 5% regular saver keeps paying 5%.
The only "risks" are opportunity costs:
- You might miss out on higher returns elsewhere (though in the current climate, what's paying more with no risk?).
- Your money is somewhat illiquid for 12 months — you can't easily access it without penalty.
- Inflation could theoretically exceed your interest rate, meaning you lose purchasing power. With CPI currently at about 1.8%, a 5% regular saver comfortably beats inflation.
In a world where stock markets just had their worst day since the financial crisis, these "risks" look pretty tame.
Common Questions
Do I need to pay tax on regular saver interest? Most people don't, thanks to the Personal Savings Allowance. Basic rate taxpayers can earn up to £1,000 in savings interest per year tax-free, and higher rate taxpayers get a £500 allowance. Unless you have substantial savings across multiple accounts, your regular saver interest is unlikely to push you over these thresholds. We've got a detailed breakdown of how savings tax works.
Can I open more than one regular saver at the same time? Absolutely. You can hold regular savers with different banks simultaneously — there's no limit. The constraint is that each one requires its own linked current account (for the best rates), and you need enough monthly income to fund them all. Running two or three at once is a solid strategy if you can manage it.
What happens if I miss a monthly payment? It varies by bank. Most won't close your account for one missed payment, but you lose that month's contribution capacity — you can't usually "catch up" by paying double next month. The maximum monthly deposit stays the same. Missing months just means less money earning the higher rate.
Are regular savers worth it if I only have £50 a month to save? Honestly? It depends on your tolerance for admin. £50 a month into a 5% regular saver earns roughly £16 in interest over the year, compared to about £5 in a typical easy-access account. That £11 difference won't change your life, but it's still free money. If you're already holding the right current account, it takes five minutes to set up and then runs on autopilot. I'd say yes — but I wouldn't switch banks specifically for it at that level.
Should I move money out of investments and into regular savers because of the market crash? This is a personal decision and not financial advice, but generally: trying to time the market by selling during a crash is how people lock in losses. Regular savers are excellent for money you haven't yet invested or for cash savings you want to optimise. They're not a substitute for a long-term investment strategy. If you've got cash sitting around earning 1% and you're nervous about investing right now, a regular saver is a far better home for it than a mattress — but don't panic-sell investments to fund one.
Regular savers won't make you rich. But in a week where financial markets are genuinely frightening, there's something deeply satisfying about an account that simply does what it says: pays you a guaranteed return, month after month, with no drama and no risk.
If you haven't opened one yet, check which offers you're eligible for and get a standing order set up this week. Future you — the one watching the next market meltdown from a deckchair — will be grateful.