Alliance & Leicester launches 7% account

Deal of the week

Alliance & Leicester has relaunched its one-year regular savings account paying 7% AER for a limited period.

The Premier Regular Saver account pays 7% AER to people who put aside between £10 and £250 each month for one year.

The rate of interest is fixed, so it won’t change during the 12-month term; however, withdrawals are not permitted and if you need access to your money your account will be closed.

But this account comes with a big catch – it isn’t available to everyone. Alliance & Leicester is only offering this savings rate to people who open a Premier Current Account. On the plus side, if you haven’t reviewed your current account recently then it is well worth doing so now.

Alliance & Leicester’s Premier Current Account could well be a contender for your money; for a start, there are no monthly fees to pay and you’ll receive £100 cashback within four months of opening it.

The account has a 0% overdraft facility for the first 12 months, after which point you’ll be charged 50p a day (or £5 a month. You’ll earn 0.5% AER, but you must pay in at least £500 in a month without your balance exceeding £2,500.

The account also comes with free annual multi-trip European travel insurance. Just remember though, you must be over 21 to qualify and anyone who already holds or has held a current account from Alliance & Leicester, Abbey, cahoots or Cater Allen in the past three months is not eligable to apply. 

Gillian Almond, current accounts manager for Alliance & Leicester, says: "The Premier Regular Saver is a great way for people to kick-start a savings habit and in a year they will have saved up a nice little nest egg, and received an eye-popping rate of interest. We seem to have had years of spend, spend, spend, now it is time to save, save, save.”

Other great regular savings deals

First Direct offers a Regular Saver ISA that pays 7% AER on monthly deposits of between £25 and £300. This rate is fixed for 12 months, and no withdrawals are permitted during this time. Transfers from previous ISAs are not accepted.

Barclays continues to pay 6% AER on its 12-month fixed-rate Monthly Saver account. You must pay in between £20 and £250 each month and interest is paid monthly. If you make a withdrawal from this account then your AER will fall to 3.03% for that month.

Abbey has just launched a new regular savings account that pays 4% AER on monthly deposits of between £20 and £250. The rate is fixed for 12 months, but will reduce to 3.67% when one withdrawal is made. This deal is available to new and existing customers.

Scottish Building Society also pays 4% AER on its Regular Savings deal, as long as you pay in between £25 and £1,000 per month. This rate includes a 2% bonus. One withdrawal is permitted per year – any more and your rate will drop to 2%.

Other great (free) current accounts

Bank of Scotland offers a Reward Current Account that pays you £5 a month rather than any interest. You can open this account with an initial deposit of £1, but you must pay in at least £1,000 each month.

While Bank of Scotland does offer you the option of arranging an overdraft, this will cost you £1 per day or £2 if you are more than £2,500 overdrawn. If you use your overdraft without permission you will be charged £5 a day.

Lloyds TSB has a Classic current account with Vantage current account that pays 4% AER on initial deposits of £1. You must pay in at least £1,000 per month and maintain a balance of between £5,000 and £7,000 to achieve this rate of interest.

Lloyds TSB offers a Classic Plus current account that pays 2.5% AER on balances between £1,000 and £2,500.