New top-rate regular saver offers 8% interest

Tembo’s regular saver could generate nearly £130 in interest

A newly launched savings account is offering a market-leading 8 per cent interest rate and could produce £129.87 in interest over a full year.

Tembo’s product is a regular saver, meaning customers pay in a fixed amount each month. The idea is to encourage consistent saving and help build a larger balance over 12 months.

Earlier in the year, Santander introduced a similar account at the same rate, while Chase has also recently brought a 6.5 per cent saver to market. Tembo’s version may stand out because of its flexibility.

Under the new offer, customers can save up to £250 a month. That is £50 more than Santander allows and £50 less than Chase’s limit.

If the monthly maximum is paid in, no withdrawals are made, and deposits begin on the first day of each month after opening, savers would end the year with £3,000 of their own money plus £129.87 in interest. By comparison, the same approach would generate £125.53 with Chase and £104 with Santander.

Although interest is paid monthly, it is paid at a lower 3 per cent rate. The extra 5 per cent comes as a bonus paid at the end of the 12-month term.

The bonus is available only to new customers, which may disappoint some savers. Even so, the account may appeal to people looking for a new place to put cash aside.

One advantage is that withdrawals are allowed, unlike with many regular saver accounts. That may make it suitable for people building an initial emergency fund, although taking money out will reduce the interest earned.

Another plus is that there is no need to open a current account to use the regular saver. Instead, the Tembo app is the entry point for opening the 8 per cent account.

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People who cannot save the full amount each month can still open the account with as little as £10 by bank transfer or £25 by direct debit.

Among regular saver accounts currently available, only first direct offers a product that could pay more over the year than Tembo’s. It offers 7 per cent on balances of up to £300 a month, although funds cannot be withdrawn during the 12-month term. At the maximum deposit level, that account would pay £136.50 in interest after a year.

Because regular savers take monthly deposits rather than a lump sum at the start, the advertised rate does not translate directly into the total interest earned over 12 months. Only the first month’s deposit gets the full 8 per cent for a year; the second month’s payment earns it for 11 months, the third for 10 months, and so on.

Richard Dana, chief executive of Tembo, said: “Our new regular saver offers a market-leading 8 per cent rate, without requiring customers to move banks or open additional accounts. And with the flexibility to access their money whenever they need it, we're making it easier for people to build their savings without compromising on the things that matter to them. At a time when every pound counts, we believe savers deserve better returns without unnecessary complexity.”

The account has been launched as changes to cash ISAs are expected to be reversed, including the scrapping of a cut to the £12,000 annual limit.