Get the top regular savings account

Variable savings rates are falling - use these savings accounts to avoid being dragged down!

More than 10% of variable rate savings accounts have reduced their rates since March, according to new research by Moneyfacts. That's despite the fact that the Base Rate hasn't shifted at all during this time.

The study showed that almost half (48.8%) of all variable rate accounts now pay Bank Rate or less, with 22.8% paying a measly 0.10% or less.

A good way to avoid getting dragged down by the savings slump is to open a regular savings account. These accounts typically offer a very decent rate of interest - and it's fixed. These accounts aren't as well-known as their easy access and bond equivalents, but they're the often best way to save regularly - as long as you don't need instant access to your money.

But when I say save regularly, I mean save regularly: you'll need to deposit a set amount every month, without fail. And, if you access the cash before the one year term ends, you'll often face a financial penalty.

If you don't like the sound of that, check out the top easy access savings accounts instead.

Still here? Good. In that case, here's a round up of the best regular savings accounts on the market. Whether you're a new starter or a big monthly saver, there should be something here for you.

My top five picks

Here are my top five regular savings picks:

And the winner is...

Let's have a look at each one in a bit more detail.

Gold medal position goes to the Norwich & Peterborough Building Society
Regular Saver. I think this account is head and shoulders above the competition, because it combines an excellent fixed rate of 5% AER with flexibility of operation.

It's also perfect for savers who want to start small, with a minimum monthly deposit of just £1. Just remember that 1.5% of the advertised rate is a bonus, dependent on conditions: In short you'll lose it if you make more than one withdrawal during the year.

If you have dependent children, the Norwich & Peterborough Building Society Family Regular Saver Account is also worth a look. This pays a whopping 6% AER (fixed), but that does include a 3% bonus which you lose if you make more than one withdrawal during the year. It can also be operated online, by post and in-branch.

Watch out for....

Last place in my table goes to the oddly-named Santa Saver account from Chorley & District Building Society. It pays 5% AER, which sounds fantastic until you realise this rate is variable and could theoretically fall at any time.

The account deposit period is set to start on 1st December and end on 25th November every year, and no withdrawals are allowed. Another reason this account doesn't quite make the grade is its low maximum monthly deposit amount: At £150 it's at least £100 lower than all the others I've mentioned.

Highly commended

Also on my list is the Barclays Monthly Savings account. This offers a slightly lower rate of 4.25% (fixed) but comes with a level of flexibility that is rare amongst regular savings accounts.

In a nutshell, you can miss as many monthly payments as you like without incurring a penalty. Just don't use this as an excuse to fritter your money away!

You're also allowed to make withdrawals whenever you want, although if you do the interest you'll be paid the following month will drop to 3.03%. And take note of the unusual set-up rules - although the account can be operated by phone, online or in-branch, it must be set up in-branch.

A top tip for savvy savers

One downside of all of the top regular savings accounts listed above is that most only allow a maximum of £250 to be invested each month.

If you can afford to save £500 every month for the next five months - or even if you can't, but you are prepared to put up with a certain amount of hassle - then you could get an even better return by opening the Alliance & Leicester Premier Direct current account, instead.

This is because this account pays a fixed rate of 6% AER (for a year) on balances up to £2,500, as long as you pay in £500 each month.

But the great thing is, because it's a current account, you can immediately withdraw your investment. In other words, while you have to pay in £500 every month, you don't have to keep it there. You could set up a standing order to send most of the money straight back to your normal current account, for spending, and only keep the amount you want to save invested.

It might take a bit of hassle to set up but if you do this, you'll earn 6% AER - 1% more than the best regular savings account in the table above! Find out more

If a regular savings account isn't for you

If you want a rate that stays put for the long-term - and you already have a lump of cash to squirrel away - you might be better off with a savings bond.

In the current climate (with the low base rate), it seems sensible to lock your money into a fairly short-term bond, so you're able to take advantage of any rising interest rates in one or two year's time.

The current market leader in the one year bond category is the Guaranteed Growth Bond Issue 48, from National Savings & Investments. It's offering a fixed rate of 3.95% AER, with a minimum deposit of £500.

And it's about as safe as a savings account gets. It comes with a 100% guarantee backed by the government, so you can save up to the £1 million limit and know you'll get your money back if anything goes wrong.

Alternatively, the best five-year fixed rate bond is currently being offered by Skipton Building Society. It pays 5.35% AER, the highest rate available, but you do need to lock your money away for five years. Find out more

Get help from lovemoney.com

If you need a bit of help getting into the savings habit, you've come to the right place!

First, adopt this goal: Build up your savings

Next, watch this video: How to save for your child's future

And finally, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

Compare savings accounts at lovemoney.com or get a current account paying 6% AER