Building society launches new savings account with 'highly competitive' 4.8% interest rate

Coventry Building Society has launched an exclusive regular savings account to "reward" loyal mortgage holders. The mutual's new Mortgage Loyalty Saver (2) pays a competitive 4.8% AER and can be opened by those who have an existing mortgage with the building society.

Savers can deposit up to £500 into the account each month within its 12-month term, meaning a maximum of £6,000 can be put away in total. Regular savings accounts typically require people to deposit a set amount each month and make minimal to no withdrawals. Oli Dyer, head of mortgage and savings proposition at Coventry Building Society, said: "This unique account rewards mortgage borrowers by giving them a highly competitive rate on their savings. It's another exclusive rate to reward our members for their loyalty and help them make the most of their money." He added: "We've designed the account to be as flexible as possible, so members can save in a way that suits them - whether that's weekly, monthly, or with occasional breaks."

With a low minimum deposit of just £1 and no limit on the number of deposits, Mr Dyer said: "Members can contribute as often as they like, up to £500 per month."

When the account matures after a year, savers will have the option to continue saving in an easy-access account, withdraw their funds, or use the money to overpay on their mortgage above the existing 10% allowance and without any early repayment charges.

The Loyalty Mortgage Saver can be opened and managed online, in branch, over the phone, or by post. Based on the current interest rate, a £6,000 deposit is estimated to earn £155.90 over 12 months, bringing the total balance to £6,155.90.

After that, the account becomes an Easy Access Saver (Maturity), a variable-rate account that allows unlimited withdrawals.

For those that don't qualify, the building society offers the Regular Saver (6) account open to all new and existing borrowers and savers at a rate of 4.25%. Flexible deposits of up to £500 can be made each month with no monthly minimum, and savers don't need a linked account to qualify.

How does the account compare?

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.

Zopa offers a 7.1% AER over 12 months with a maximum 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.

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.