NatWest has unveiled a new account with a market-leading 3% interest rate designed to help customers with little or no savings.
Customers can put between £1 to £50 per month into the digital regular saver account and will need to set up a standing order at account opening. Interest is paid monthly, with the 3% variable rate paid on balances of up to £1,000. A 0.01% rate is paid on balances over that amount.
The account has been designed to help customers build a buffer that could be useful as households deal with economic uncertainty.
NatWest said that in the months following the initial Covid-19 lockdown, more than 400,000 customers grew their savings to £100 or more for the first time. The bank is aiming to help an additional 2 million customers to start saving by 2023.
The new account is instant access, so customers can dip into it if they need to get their hands on the cash. It is available through the bank’s app or website.
The launch provides some better news for savers, after NS&I announced on Monday it would slash interest rates in November and cut the Premium Bonds prize fund a month later. Savers with NS&I’s popular direct saver account will receive a cut in rates from 1% to just 0.15%, while the return on income bonds will plummet from 1.15% to 0.01%.
People need to have a NatWest current account if they want to open the new savings account, but can open both at the same time if they do not have one.
Lewis Broadie, a savings expert at NatWest, said: “During lockdown many of our customers started to save for the first time. We are introducing the new digital regular saver to help our customers start and maintain a long-term savings habit which will help them to become more financially secure.”
Rachel Springall, a finance expert at Moneyfacts.co.uk, said NatWest’s rate was market-leading for this type of deal. She said other accounts on the market included a fixed-term regular saver account from HSBC that pays 2.75%. The account allows people to save up to £3,000 at a 2.75% interest rate that is fixed for 12 months, but with this account savers will need to be prepared to keep their money in it for a year.
Springall said of the NatWest account: “It’s great to see such a competitive rate for savers looking to kickstart the savings habit and after the lockdown there may well be consumers who have some disposable cash spare to save.
“On the other end of the spectrum, there may be consumers who wish to start up a savings pot in light of the uncertainty surrounding the coronavirus pandemic. The gross interest rate of 3% would be limited on balances up to £1,000 and the maximum deposit is £30 per month, also as it is a variable rate it can change.
“All in all this account may attract savers who want to put aside a bit of cash each month but also have the option to dip into their savings if they so wish.”
