Best savings rates
Whether saving is one of your priorities for 2010, or your money is stuck in a low-paying account, it's vital to find an account where your nest egg can grow.
In this article, Moneywise reviews the best instant access, fixed rate, regular and children's savings account currently on the market.
INSTANT ACCESS
If you're looking for an account where you can access your money quickly, then a no-notice deal is a good idea. Just remember, the interest rate on these accounts is variable so it could decrease down the line. Also, watch out for sneaky terms and conditions - not all instant access accounts offer unlimited withdrawals, so shop carefully.
The AA offers an internet account paying 2.8% AER on deposits from £1, the rate includes a bonus of 2.3% for 12 months, and unlimited withdrawals are allowed.
The Post Office offers an online saver paying 2.75% AER on deposits from £1, including unlimited withdrawals without penalties. The rate includes a 1.25% bonus for the first 12 months.
NOTICE ACCOUNTS
If you want to make withdrawals but are happy to give your bank or building society notice before you do, then you could get a better rate with a notice account, although recently rates have been disappointing.
Stroud & Swindon Building Society pays 2.9% on deposits of £1,000 and requires 90 days notice. This includes a bonus of 0.9% for the first 12 months.
Newcastle Building Society Reward Saver offers a 2.75% rate of interest on deposits of over £500 and requires 120 days notice. The rate includes a bonus of 1% for the first 12 months.
FIXED RATE
Fixed-rate savings accounts are normally aimed at people with a lump sum that they wish to lock away for a pre-agreed period of time. Interest is fixed so your return is guaranteed.
However, bear in mind that withdrawals and further deposits are rarely allowed.
1. Short term (one to two-year terms)
ICICI Bank pays 3% on £1,000 deposits for one year on its HiSAVE account and its two–year account pays 3.70% AER on deposits from £1,000.
Santander pays 3% on deposits from £1 for 15 months, and its two-year fixed-rate bond pays 3.5% on deposits over £25,000.
Coventry Building Society has launched a two-year fixed rate bond offering 3.70% on deposits from £1. There are no withdrawals or early closures allowed.
Sainsbury's Finance pays 3.55% on deposits over £5,000 with its two-year fixed-rate saver.
Nationwide pays 3.25% on deposits from £1 on its two–year account.
2. Medium term (three and four-year terms)
ICICI Bank pays 4.15% for four years on deposits from £1,000, and the AA also pays 4.1% for three years on deposits from £1.
3. Long term (five-year terms)
ICICI Bank pays 4.75% on deposits over £1,000 on its five-year online account.
The AA pays 4.55% AER on deposits of £1 and Clydesdale Bank pays 4.33% AER again over five years on deposits from £2,000.
REGULAR SAVINGS
The current economic backdrop has not only highlighted the importance of saving, it has also created a financial climate where savings products offer better value than in recent years.
Norwich & Peterborough Building Society pays 5% AER on deposits between £1 and £250 a month, provided no more than one withdrawal in a year is made. This includes a 3% conditional bonus. This account is available online as well as in branch and by post.
Scottish Building Society also pays 4% AER on deposits between £25 and £500 per month, with one permitted withdrawal each year. This account can be operated in branch or by post.
CHILDREN'S SAVINGS ACCOUNTS
If you still have your child trust fund (CTF) voucher and want to put it into into a cash savings account, then the Hanley Economic Building Society currently offers an account paying 5% AER which allows you to make additions from £50.
The above rate is variable and could change.
If you have already invested your voucher but want to open up a savings account for your child, then Halifax's one-year Regular Saver account pays 6% AER for one year on deposits from £10 to £100 each month. This allows no withdrawals.
For instant access Northern Rock has a "Little Rock" account that offers 4% from a minimum deposit of £1 to the maximum of £20,000.
