Most people seem genuinely confused by regular savers.
In my experience, they usually fall into one of two camps:
Either:
“7%?! Sounds like risk-free stock market returns.”
Or:
“This sounds confusing and slightly annoying.”
Can you withdraw money?
Do you have to save every month?
Can you change the amount?
Personally, I love regular savers. But I think it helps to understand what they actually are before getting excited by the headline rate.
What Regular Savers Aren’t
Let’s start with the obvious bit.
The 7% figure is slightly misleading.
Not in a dishonest way — it’s technically correct — but because you’re never earning 7% on the full amount for the entire year.
That’s the part many people miss.
Regular savers also aren’t:
- a secret financial cheat code
- a meaningful alternative to investing
- life-changing returns
And yes, you’ll probably need at least a vague plan for the money.
What They Are Good For
This is where I think regular savers quietly shine.
They’re great for:
- building a saving habit
- automating your finances
- treating savings like a monthly bill
- setting money aside for something specific
Tax bills are a good example.
So are holidays, emergency funds, or next year’s car insurance.
There’s something psychologically useful about money slowly accumulating in the background every month.
Why I Like First Direct’s Version
As I mentioned in my previous post, I’ve started thinking of First Direct as my “money manager” account.
The place where money arrives and gets distributed elsewhere.
And honestly, the regular saver fits naturally into that setup.
As an aside, it also feels oddly nice to give the account another “job”.
I know bank accounts don’t have feelings, but there’s something satisfying about it becoming a more active part of the system rather than just a place money passes through.
And to First Direct’s credit, their regular saver is genuinely one of the best available in the UK.
So How Does It Actually Work?
First Direct lets you save between £25 and £300 per month into a regular saver paying 7%.
The important part is this:
You only earn interest on the money for the amount of time it actually sits there.
So:
- In month one, you earn 7% on £300
- In month two, you earn 7% on roughly £600
- In month twelve, you finally earn 7% on the full £3,600
That means the average balance across the year is roughly half the final amount.
Which is why the actual profit feels much closer to around 3.5% on the total money contributed.
If you save the full £300 every month for a year, you’ll end up with roughly £126 in interest by the end.
Still good. Just not quite the “7% on £3,600” people sometimes imagine.
The Optimal Way to Use It
This is where regular savers become more interesting.
The ideal setup is usually to drip-feed money from an easy-access savings account into the regular saver every month.
For example, imagine you already have the full £3,600 sitting in a savings account paying 4.30%.
Option 1: Leave Everything in the 4.30% Account
You’d earn roughly:
~£155 interest over the year
Simple, clean, and honestly perfectly reasonable.
Option 2: Move £300 Per Month Into First Direct’s 7% Regular Saver
Now things get slightly more interesting.
As the money slowly leaves the 4.30% savings account, the remaining balance continues earning interest while the transferred £300 chunks start earning 7% inside the regular saver.
So you effectively get:
- ~£126 from the First Direct regular saver
- ~£77 from the remaining balance still sitting in the 4.30% account
Giving you a combined total of roughly:
~£203 interest over the year
That works out to an effective blended return of around 5.6% across the original £3,600.
Not bad at all for cash savings.
So Is It Worth It?
Honestly, that depends entirely on you.
You’re not going to become wealthy from a regular saver.
And if moving money around manually every month sounds annoying, the extra return probably isn’t worth thinking about.
But I think people underestimate how valuable simple, automated financial systems are.
A regular saver quietly encourages consistency.
And consistency is usually more useful than chasing the absolute perfect rate every few weeks.
That’s ultimately why I like First Direct’s regular saver so much.
Not because it’s a “hack”.
Because it fits neatly into a calm financial system and quietly does its job in the background.
The best way to think about regular savers is probably not as a loophole, but as a structured savings booster for money you were going to save anyway.