The Co-operative Bank offers bumper 7% interest rate on savings account | Personal Finance | Finance
The Co-operative Bank offers a regular savings account with a bumper interest rate of 7%. This rate remains competitive despite recent reductions in savings rates following the Bank of England’s decision to hold the base rate at 4.25% in June. Regular savings accounts continue to be among the few products providing returns above the current base rate.
These accounts are designed for people who want to save a fixed amount each month over a set term, typically 12 months, and earn a higher interest rate than standard savings accounts in return. With the Co-operative Bank’s Regular Saver account (Issue 1), savers can deposit up to £250 per month, allowing a maximum total deposit of £3,000 over a 12-month period.
Interest is paid at the end of the term, with a full £3,000 deposit expected to earn around £114.21, bringing the total balance to approximately £3,114.21.
The account can be opened with a minimum deposit of £1. Eligibility criteria include being a UK resident aged 16 or over and holding a Co-operative Bank current account.
For joint applications, only one applicant needs to have an existing current account.
Unlike many regular savings accounts, this product permits withdrawals at any time without penalty.
What else is out there?
Principality Building Society is still topping the table for regular savers with an Annual Equivalent Rate (AER) of 7.5%. The account runs for six months, and interest is paid on maturity.
Savers can invest up to £200 per month, which means the pot can grow to a total of £1,200, and withdrawals are not permitted until the account matures. With a maximum monthly investment of £200, savers will end up with £1,227.53, including £27.53 in interest. So, while it may have a market-leading AER, its six-month term limits the total interest earned.
First Direct places just behind with a 7% AER over 12 months. The account allows a higher monthly deposit of £300, which totals up to £3,600 in savings over the course of a year.
At the end of the term, savers will have £3,736.50, including £136.50 in interest. Although First Direct’s interest rate is lower, the longer term and higher deposit limit make it a potentially better option for amassing larger savings.
Other providers offering competitive interest rates on regular accounts include Nationwide Building Society with a 6.5% AER, and Lloyds Bank with a 6.25% AER on its Club Lloyds account.
