Major building society launches ‘market-leading’ savings rate of 8% for 3million customers – but how does it compare?

A MAJOR building society with 3million customers has launched a savings account paying out 8% interest, making it one of the best deals on the market.

Yorkshire Building Society has launched a new regular savings account letting customers deposit up to £50 per month.

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Regular savings accounts usually require you to put in a certain amount of money each month and can feature withdrawal limits, but often come with higher rates.

YBS' new regular saver comes with a variable interest rate of 8% on a 12-month term, which means it could go up or down over the year period.

One perk of the account is there is no minimum monthly deposit as is often the case with regular savings accounts.

But, if you added the maximum £50 a month (starting from October 1) at 8% for 12 months and made no withdrawals, you would make £26.01 on top of your £600 - £626.01 overall.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: "As the past few years have demonstrated, having an emergency fund by saving a bit of money each month can make a huge difference.

"Regular savings accounts encourage the savings habit and give consumers the chance to build a nest egg for a specific goal or to fall back on in difficult times."

You can only withdraw a maximum of three times from the YBS savings account across its 12-month term.

For security reasons, you cannot withdraw money for the first 14 days after opening the account.

You must also be a UK resident and 16 or over to open the account and cannot add money from another account with Yorkshire or Chelsea Building Society.

You can also only open one of the accounts and any applications must be done via YBS' website.

The latest move from YBS comes after a number of banks and building societies slashed rates across savings accounts.

Last month, Chip cut the rate of its variable rate cash ISA from 5.1% to 4.84% following the Bank of England's decision to cut the base rate from 5.25% to 5%.

The Co-operative Bank also made a swathe of interest rate cuts across its saving products with its easy-access Base Rate Tracker account falling by up to 0.75%.

Chris Irwin, director of savings at YBS, said it was keen on helping savers "kick-start" a healthy savings habit and put aside money that will help "build a financial safety net".

How does the account compare?

Moneyfactscompare.co.uk said Principality Building Society is the only other bank or building society offering a regular savings account at 8%, however the interest is based on a six-month term.

It said the Co-operative Bank's regular savings account is the next best option - but that only offers a 7% interest rate for a year.

That means, based on a 12-month term, YBS' latest deal is the best of its kind on the market.

However, if you are looking to save a bit more, it might be worth choosing another regular savings account that lets you put in more each month and will pay out more interest overall over the term.

For example, Moneyfacts said the maximum you can save with YBS is £600 over 12 months whereas Co-op Bank's account lets you stash away £3,000 a year.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said one major perk to the YBS regular savings account is that it is open for those aged 16 or over.

Some banks and building societies don't let you open an account unless you are 18 or older.

Sarah said: "This one has the added advantage that it’s open to anyone over the age of 16 – plenty of these kinds of deals are only available as an added extra for current account customers."

She added: "The rate is pretty impressive. If you’re starting out on a savings journey, it’s the most generous one-year regular savings account around."

What other options are available for savers?

There are a number of different savings accounts available to suit all needs.

Easy access savings accounts are the most flexible type with most letting you make as many deposits and withdrawals as you want.

They can be useful if you want to dip in and out of your savings on a regular basis while still building up a nest egg.

However, all easy access savings accounts pay a variable rate of interest which can go up or down.

Fixed-rate bonds typically pay higher rates than easy access accounts as you agree to lock away your money for a specific period.

The interest rate you agree is fixed until the end of the term, although you can usually only deposit into the account for a limited period after opening it and won't normally be able to access your savings until the end of the term.

There are also regular savings accounts which, usually, involve you having to deposit a minimum amount of money in each month.

They also sometimes come with restrictions on how many times you can withdraw from them over the duration of the term.

According to Moneyfactscompare.co.uk, as of September 11, the best rate you can currently get on an easy access savings account is 4.85% with Raisin.

Meanwhile, the best rate a fixed term bond is 5.23% with GB Bank which comes with a six-month term.

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