The Co-operative Bank offers 7% interest rate on savings account

The Co-operative Bank is offering people looking to get into a savings habit a competitive 7% interest rate on its regular saver.

Regular savings accounts typically require people to deposit a set amount each month and make minimal to no withdrawals. They're great for disciplined savers who want to build their savings over time and benefit from higher interest rates than standard accounts. Savers can launch The Co-operative Bank's Regular Saver (Issue 1) with just £1, and interest is paid after 12 months when the account matures. You can save up to £250 per month in the account, meaning a maximum of £3,000 can be invested over the course of the term.

Based on the current interest rate, a £3,000 deposit is estimated to earn £114.21 over 12 months, which would bring the total balance to £3,114.21.

To apply, savers must be UK residents aged 16 and over and already have a Co-op Bank current account.

This account is more flexible than what's typically expected from a 'regular' savings account, as withdrawals are allowed at any time without penalty.

Principality Building Society tops the table 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, which means the pot can grow to a total of £1,200, and withdrawals are not permitted until the account matures.

With a maximum monthly investment of £200, savers will end up with £1,227.53, including £27.53 in interest. So, while it may have a market-leading AER, its six-month term limits the total interest earned.

In contrast, Zopa offers a 7.1% AER over 12 months with a higher limit of £300 per month, allowing savers to amass £3,600 in total savings. Interest is paid at the end of the term, with a full £3,600 deposit expected to earn around £136.50, bringing the total balance to approximately £3,736.50.

Although the interest rate with Zopa is lower, the longer term and higher deposit limit make it a potentially better option for larger savings. Savers are allowed to withdraw money from the Zopa savings account at any time without penalty. However, they'll only be able to replace the money within the monthly allowance of £300. For example, if you withdraw £500 but want to put money back in, you can only deposit up to £300.

First Direct is just behind with a 7% AER over 12 months. The account allows a monthly deposit of £300, which can also total up to £3,600 in savings over a year. At the end of the term, First Direct says savers will amass around £3,736.50, including £136.50 in interest.

Other providers offering competitive interest rates on regular accounts include Nationwide Building Society with a 6.5% AER, and Lloyds Bank with a 6.25% AER on its Club Lloyds account.

Savers have been urged to review their accounts to check they're receiving a competitive interest rate, as "loyalty does not pay".

Rachel Springall, finance expert at Moneyfactscompare.co.uk said: "It comes down to savers to proactively review rates and switch their account if they are getting a poor return on their hard-earned cash.

"It is vital that savers look beyond the high street banks and instead take notice of the many challenger banks and mutuals competing in the savings arena."

According to Ms Springall, in June, the biggest high street banks pay an average of 1.56% across easy access accounts, she added: "But even this pitiful return is being eaten away by inflation, which sits above its 2% target.

"It may be convenient to leave pots with such prominent brands, but it's costing savings in better returns available elsewhere. Even the average easy access rate pays more, at 2.72%, which shows how fundamental it is for savers to act now to make their money work harder."