The bank is offering a Christmas Saver account for people who want to put money aside for the next festive season, paying 10% until December.
It follows the launch of similar high-paying accounts from Halifax and HSBC.
However, savers have been warned they need to be vigilant when such deals end because the rates often plummet.
Bradford & Bingley will transfer customers into its “matured funds” account at the end of the term, unless they move their money elsewhere. This account pays two percentage points below base rate, currently just 2.5%.
Sue Hannums at Chase de Vere, an independent adviser, said: “It is great that institutions such as B&B are encouraging people to start saving again. But many of these deals have end dates so savers must keep an eye on the rate and be ready to move when the account matures.”
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Regular-savings accounts often pay higher rates of interest than instant-access deals, but come with certain stipulations. They tend to pay a fixed rate of interest for a set term, and in order to achieve the advertised rate you have to deposit money into the account every month. You cannot usually access the money until the end of the term.
The amount you can pay in is normally capped: with B&B’s Christmas Saver, the maximum is £150 a month.
The term on the B&B product is quite short compared with other offers on the market, so you should move quickly if you want to take advantage. Unfortunately you can only apply through a B&B branch. There is no option to apply online or over the phone.
There are alternatives, though. Alliance & Leicester (A&L) is also offering a regular savings account that pays 10%. Its Premier Regular Saver beats the B&B deal because it has a term of 12 months and you can pay in up to £250 a month.
However, the account is available only to those who apply for an A&L Premier or Premier Direct current account — and existing current-account customers cannot take advantage. Premier pays 1.5% for balances in credit, while Premier Direct pays 5% for the first year, after which it is one point below base rate, currently 3.5%.
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Emma Buckby, 28, a prescribing technician for an NHS primary care trust in Leicestershire, opened an Alliance & Leicester Premier Direct current account two months ago and saves £250 a month into the linked savings account. Buckby said: ‘The fact I could earn 10% on my savings was a big factor when deciding to switch my current account.”
Once Premier Regular Savers’ 12-month term has come to an end, Buckby’s money will be moved into her Premier Direct current account, where it will earn 3.5%.
Norwich & Peterborough, HSBC and Abbey also have regular-savings deals that are available only to current-account customers. All are 12-month deals. N&P and HSBC both pay 8% and Abbey pays 6%.
Stuart Glendinning at Moneysupermarket.com, a comparison service, said: “If you don’t bank with one of the firms such as A&L or HSBC that offer high-paying regular-savings accounts linked to a current account and don’t want to switch you current account, Halifax offers a good regular-savings deal. It is available online and over the phone, as well as on the high street, unlike the B&B deal which is restricted to branches.”
Halifax’s regular saver pays 7%, and you can pay in up to £250 a month. This is a 12-month deal and when you open it you choose a linked Halifax savings account. At the end of 12 months the money is swept into your chosen account.
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One advantage of the Halifax deal is that the account doesn’t close after a year. You can continue making your monthly payments and begin another 12-month term. You may get a different rate of interest, however. Customers coming to the end of their term now will get 7% interest for another year, but there is no guarantee that next year’s rate will be the same.
The best account to nominate as your linked account is Halifax’s Websaver, paying 4.5%.