First Direct to up its regular saver rate to 7%

First Direct is to increase the rate on its regular savings account to 7% from 1 December 2022.

Joining HSBC in increasing its savings rates, First Direct has announced that from Thursday 1 December the interest rate on its Regular Saver Account will increase to 7%. This is double what it previously was at 3.50% and makes it one of the most competitive rates available.

First Direct Regular Saver Account

While a 7% AER interest rate is one of the strongest options around, it is important to note that First Direct’s Regular Saver Account is only available to its current account holders.

The rate is fixed for 12 months and customers can save between £25 and £300 a month, up to £3,600 per year. If you were to save the maximum amount, then you could potentially earn just under £140 in interest in a year.

You are able to change your standing order amount at any time. However, partial withdrawals aren’t allowed and if you close your account before the end of the 12-month period you will only get First Direct’s standard savings account variable rate which is currently 0.5% AER.

Higher rates to come?

After years of low interest rates, we are now starting to see more activity in the savings market. Providers are responding to the Bank of England base rate rises and are launching more competitive rates.

However, it appears that the most favourable rates are still reserved for customers.

The most competitive regular savers currently on the market are linked to the provider’s current account. Banks are also offering switching incentives – HSBC is offering £200 to switch and First Direct has a £175 switching bonus in place – so customers stand to pocket themselves a decent amount of money in a year if they take advantage of the full offering.

However, it is important to make sure that the product suits your circumstances. If you are unable to make a regular payment to a savings account each month or you think may need to access your money before the 12 months is up, then even with an interest rate of 7%, the account probably isn’t a good fit for you.