Nine out of 10 regular savings accounts deliver poorer returns annually compared to standard easy access accounts, despite attractive headline rates, Spring has revealed.

MoneyComms analysis commissioned by the savings app found that just five of 45 regular saver accounts delivered a higher annual return than an easy access account paying 3.82%, assuming the full amount was available to deposit upfront.

Four of these five accounts also capped savings at £3,000.

Spring said that money paid into a regular saver gradually throughout the year does not benefit from the advertised interest rate for the full 12 months. It added that while the first monthly deposit may earn interest for the whole year, later deposits have considerably less time to benefit.

As a result, the average return across the regular savers reviewed was 2.88% of the maximum amount contributed, in comparison to the 5.25% average rate that is advertised across all 45 accounts.

The analysis also found that many regular savers become far less attractive once their introductory term ends.

The average go-to rate across the accounts analysed was just 1.94%, with some dropping to as little as 0.75%. As a result, savers who leave their money where it is after maturity could see their earnings fall sharply without realising it.

Furthermore, the research revealed that more than half (51.1%) of the accounts reviewed had restrictions on withdrawals, while almost 29% required customers to hold a current account with the same provider.

Spring found that two of these regular saver accounts did not permit early closure and three applied an interest penalty if the account was closed early.

Head of money at Spring, Derek Sprawling, stated: "Regular savers can be a useful way to build a savings habit, particularly for people putting money aside from their income each month. However, savers should not assume that the highest advertised rate will automatically give them the best return.

"Because money is paid into these accounts gradually, only part of the balance benefits from the headline rate for the full term. If someone already has money available to save, they may earn more by placing it into a competitive savings account straight away.

"It's vital savers make note of when their regular saver term ends and check the go-to rate carefully. With the average falling to just 1.94%, failing to review an account could mean missing out on valuable interest."

Moneycomms personal finance expert, Andrew Hagger, added: "The headline interest rates on regular savings accounts often look attractive, however some are very restrictive and far less appealing on closer inspection.

"In some instances, you’re just as well finding a ‘no strings’ best buy easy access savings account and setting up a regular payment from your current account – it’s a great way to build your nest egg but without all the restrictive terms and conditions."

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