Skipton BS launches 7.5% savings rate

Skipton Building Society has today launched a market-busting regular saver account paying 7.5 per cent.

The deal, which is exclusively for existing Skipton members, allows savers to pay in up to £3,000 a year – or £250 per month – with no minimum monthly deposit and the option to skip a month if needed.

The 7.5 per cent rate makes Skipton’s deal the highest headline paying savings account on the market, topping First Direct’s regular saver paying 7 per cent.

However, as we explain below, it is possible to actually earn more interest with First Direct as it allows a higher £300 per month to go into the account.  

It is thought that 1.1 million Skipton customers are currently eligible to benefit from this new deal.

Unfortunately non-members won’t be able to benefit, as those who sign up must have either a savings account or a mortgage with Skipton, with a minimum balance of £1, which began on or before 31 May 2023. 

Someone stashing the maximum £250 a month into Skipton’s deal will accrue £121 of interest over the 12 month period.

Maitham Mohsin, head of savings at Skipton Building Society, said: ‘With billions of pounds just left in accounts paying virtually no interest, it’s important Britons act now, grab their money by the scruff of its neck, and start making it work hard for them.

‘Being a member matters, and so our new regular saver gives more than a million people the opportunity to make their money work harder than it can in other accounts, but we also pride ourselves on giving above-market value across all our savings accounts.’

How does the account work? 

For the 1.1 million Britons that are eligible, Skipton’s Member Regular Saver can be opened and managed online, in Skipton’s branches, telephone or post.

The 7.5 per cent rate is fixed for the 12 months with savers needing £1 to open the account.

It allows customers to save up to £250 each month. Any monthly allowances not utilised can be rolled over to future months, up to a maximum of £3,000 over the 12 month term. 

This means members can pay in more than once each month provided that the maximum monthly investment of £250 is not exceeded, unless they have accrued monthly allowances from previous months which can be rolled over and used in future months. 

It’s also worth noting that members won’t be able to withdraw part of their account balance, however, they can close their account at any time and withdraw the full balance.

Joint accounts are not allowed, and Skipton are only allowing one account per member.

Is it a no-brainer?

In terms of other regular savings accounts, it appears at first glance that Skipton tops the table with this 7.5 per cent rate.

But, both Lloyds Bank and First Direct regular savings account give customers the potential to accrue more interest, because they allow for higher monthly deposits, despite the lower headline rate on offer.

A regular savings account which limits how much someone can put away each month also means the headline rate may not turn out to be as lucrative as some may assume.

Regular savers are great for people drip-feeding and getting into the savings habit.

For example, in this case for those wanting to put £250 of their salary away each month – but no more.

Savers drip-feeding their savings into the best easy-access deals are unlikely to benefit from as good a return than the top regular savings accounts.

The best easy-access savings account pays 3.85 per cent. Someone drip feeding £250 of their cash into this account each month could expect to earn just £62 over the course of one year – close to half that someone might earn from Skipton’s regular saver. 

Easy-access accounts can often be better, even at lower rates, for lump sum funding. 

If savers have the money upfront, then often the daily interest on that lump sum will beat drip-feeding it via a regular saver, even if the regular saver is a higher rate, because it’s only the last month they’ll earn that higher rate on the whole amount.

However, it appears that Skipton’s new deal has finally tipped the balance back in favour of regular savings. 

The best online easy-access rate is currently offered by the savings and investment app, Chip. It pays 3.82 per cent on balances up to £85,000.

Someone stashing £3,000 in this account could expect to earn £114.60 over the course of one year.

That’s £6.40 less than what a saver could earn by saving the maximum £250 each month into Skipton’s regular saver.