NatWest announced the launch of its new savings account titled Digital Regular Saver last month, with this savings option offering an interest rate of three percent. The market-leading rate is said to be the highest rate of interest to be introduced by a UK bank this year.
The bank says the regular savings account is aimed at helping customers who have no savings to develop a savings habit.
It comes after more than 400,000 NatWest customers began saving for the first-time during the recent UK lockdown.
Now, the bank is aiming to help an extra two million customers to start saving by 2023, and increase financial capability.
Unlike other savings account, the Digital Regular Saver does not expire after a year.
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Another difference flagged by the bank is its flexibility, with the account allowing for withdrawals to be made without the need to close the account.
So, how does this account work?
Digital Regular Saver customers can save between £1 and £50 each month in the account, and they will need to set up a standing order at account opening.
The interest is paid monthly, with the top rate of three percent interest being paid on balances of up to £1,000.
For balances of more than £1,000, the interest rate which will be paid is 0.01 percent.
Lewis Broadie, NatWest’s Savings Expert 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.”
Savers may wonder who is able to open this savings account.
NatWest explains it is exclusively available for current account customers who are aged 18 or older.
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Furthermore, this account is only open to UK residents.
Those who wish to can open the account via the NatWest mobile app or online via the bank’s website.
It comes amid a series of cuts to interest rates in 2020.
Currently, the Bank of England Base Rate is being maintained at a historic low of 0.1 percent, following two successive cuts in response to the coronavirus outbreak back in March this year.
Another way in which some may be able to set aside cash for the future is via the government-backed Help to Save scheme.
This account, which certain people entitled to Working Tax Credit or receiving Universal Credit may be eligible for, offers savers a bonus of 50 pence for every £1 they save over the course of four years.
It’s possible to earn two tax-free bonuses over four years.
The most a person can pay into this account each calendar month is £50, adding up to a limit of £2,400 over four years.
As such, the maximum a person can earn from their savings in four years is £1,200 in bonus money.
This money is paid into the savers’ bank account, rather than their Help to Save account.