Nationwide Building society offers bumper 6.5% interest rate on savings account

Despite falling UK savings rates, Nationwide's Regular Saver continues to offer competitive returns of 6.5% AER, making it one of the best options on the market.

Regular savings accounts usually require a fixed monthly deposit and limit withdrawals, making them ideal for disciplined savers looking to grow their savings steadily while earning higher interest than standard accounts. Nationwide's Flex Regular Saver can be opened with just £1, and interest is paid annually on the account's anniversary.

Monthly deposits are limited to £200, allowing a maximum contribution of £2,400 over the year. At the current interest rate, this would earn £84.50 in interest after 12 months.

The account is open to UK residents aged 16 or over who already hold a Nationwide current account.

Unlike many regular savings accounts, this option offers greater flexibility by allowing up to three penalty-free withdrawals. However, making a fourth withdrawal will reduce the interest rate to 1.5%.

What else is out there?

Principality Building Society is still leading the way for regular savers, with an Annual Equivalent Rate (AER) of 7.5%. The account runs for six months, and interest is paid on maturity.

Savers can invest up to £200 per month, allowing the pot to grow to a total of £1,200, and withdrawals are not permitted until the account matures. So, while it may have a market-leading AER, its six-month term limits the total interest earned. With a maximum investment of £200 per month, savers will end up with £1,227.53, including £27.53 in interest.

First Direct places just behind with a 7% AER over 12 months. The account allows a higher deposit of £300 per month, which totals up to £3,600 in savings over the course of a year.

At the end of the term, savers will have £3,736.50, including £136.50 in interest. Although First Direct's interest rate is lower, the longer term and higher deposit limit make it a potentially better option for amassing larger savings.

Savers are being urged to act quickly to secure the top rates while they're still available, as anticipated Bank of England Base Rate reductions will lead to further savings rate cuts.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: "Savings rates have been in retreat mode in recent months, and while more than 1400 savings accounts currently beat inflation of 3.4% (in the 12 months to May), those bumper pre-tax returns are on the decline.

"With more bank rate reductions expected this year, those who want to preserve their return must act fast by securing the best deal possible while interest rates remain on the higher side. This is imperative for anyone with money idling in a current account or an old savings account offering a poor return, which is being slowly eroded by inflation. Worse still, when savers consider their post-tax net return, they may find their cash is being eroded even faster than they feared."