First Direct regular savers to earn 7%

Starting tomorrow, First Direct will increase the interest on its regular savings account to 7 percent.

You must have a First Direct checking account and be able to pay a maximum of £300 per month.

Meanwhile, its parent bank, HSBC, is increasing its two-year fixed-rate savings deal starting tomorrow.

The two-year fixed rate account is increased by 1.25 percentage points to 3.75 per cent, with a minimum deposit of £2,000.

The bank also waives early closing fees for fixed-rate savings accounts, giving them full early access to withdraw or move to a better deal.

From 1 December, the 12-month fixed interest rate of the Regular Saver will also increase from 1 percent to 5 percent.

Clients can deposit up to £250 per month and interest is paid at the end of the year. Many challenger banks are offering more than 4.6 percent for a two-year fix, including Investec’s 4.75 percent deal.

Fixed rate deals have skyrocketed this year. The two-year rate paid an average of just 0.54 percent interest in January.

Last month, interest rates hit 3.55 percent, the highest level since 2009, according to data from the Bank of England.

Savers rushed to lock in higher rates as a record £11.3bn was saved in fixed deals last month – four times as much as the previous month.

Experts say much of this money was likely siphoned from lower-paying, easy-to-access accounts.

HSBC also increased interest rates on its Isa accounts by 0.9 percentage points, while its Premier Loyalty account will pay 2.5 percent.

a.cooke@dailymail.co.uk

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