What is a regular savings account and how does one work?

What is a regular savings account and how does one work? | YBS

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At a glance:

A regular savings account is for people who want to save every month towards a goal.

There may be limit on how much you can pay in each month.

There may also be limits on how often you can withdraw money from this type of account.

How does a regular savings account work?

Interest rate lasts a set period of time.

Minimum amount you have to pay in each month.

Limits on how much you pay in per month.

Limits on how often you can withdraw money.

There are a few rules you’ll need to know before opening a regular savings account:

A regular savings account can be used to build up savings over a period of a year or more

There may be an upper and lower limit on how much you can save each month

There may be limits on how often you withdraw money

Sometimes called a monthly savings account, this account may be useful if you want to get into the habit of saving each month

How does interest on a regular savings account work?

There are a few factors that affect how much interest you can earn from a regular savings account:

The interest rate – how much interest you get from the account.

How much you pay in – any limits on how much you can pay in, or if you don’t pay in the maximum amount each month.

When you pay in – paying towards the end of the month may mean you earn slightly less interest.

Interest is often paid annually. The interest rate you’re offered usually has a set term (a year, for example). So, you’ll get all the interest you’ve earned over a year at the end, all at once.

Paying into a regular saver

You may want to transfer money on payday from your current account. This can be a good way to save, as it removes the temptation to dip into your savings pot during the month.

Considering a regular savings account

Why pick a regular savings account?

You want to save every month.

You won’t need to access your money often.

You can commit to saving the minimum amount set by the account every month.

You want to save up for a goal over a long period of time, like a wedding, holiday, or a car.

What to think about before picking a regular savings account

You may need access to your money more often than the account allows.

If you have a lump sum to save, you may get better returns from a different type of savings account. This isn’t always true – compare options before deciding.

Can I have more than one regular savings account?

There’s no limit on the number of regular saving accounts with different providers that you pay into (as long as you stick to the rules of each). There may be a limit to how many you can have with the same provider.