July's top seven savings accounts

With savings rates starting to rise, here's a roundup of some of the best places to stash your hard-earned cash this month.

Savings rates used to be fun to write about. After all, there's nothing better than knowing your hard earned cash is earning lots of lovely interest.

That was until the recession hit and we started seeing best buy accounts which paid less than 1%.

That's right, less than 1%!

But now, volatility in the money markets means lenders want our money again - which, in turn, means rates are slowly but surely starting to rise as savings providers compete for our cash.

So is now a good time to shift that savings stash?

First of all, take a look at the rate you're currently being paid. If it doesn't cut the mustard, it may be time to look elsewhere. And to give you a heads up, here are some of the best paying savings products currently on the market.

Best buy Instant access accounts (£1+)

Account	Interest rate (AER)	Minimum deposit	Interest paid	Rules
Alliance & Leicester (A&L) - Online Saver Issue 5	3.15% (variable). Includes tiered bonus.	£1-£2m	Annually	Tiered bonus: 2.65% bonus for balances £1-£24,999. 2.4% bonus £25k-£49,999. 2.15% bonus £50k-249,999. 1.65% bonus £250k-£2m.
Birmingham Midshires -Telephone Extra Account	3.15% (variable) (Includes a fixed 2.65% bonus rate for the first 12 months).	£1	Annually or monthly	Fixed rate bonus: 2.65%
Ing Direct - Savings Account	3.00% (variable). Guaranteed rate for 12 months.	£1-£1m	Monthly	Rate reverts to 0.5% after 12 months. New customers only.

Compare easy access savings accounts at lovemoney.com

All bonuses are not equal

As you can see, Alliance & Leicester and Birmingham Midshires top the table at 3.15%AER.

However, there is an important difference between the rates payable. Whilst Birmingham Midshires rate includes a fixed bonus of 2.65%, Alliance & Leicester's includes a variable rate bonus. This obviously means it can change at any time, which could potentially leave you earning a less than competitive rate.

However, it's worth noting that the Alliance & Leicester bonus is tiered. So while all customers earn the same 3.15% rate, the amount that's due to the bonus depends upon your balance. Stash £250k away, for example and your bonus accounts for just 1.65%. However, stash £100 away and the full 2.65% of your 3.15% rate is down to the variable rate bonus - which could feel risky.

Regular savers

According to NS&I's latest report, we're saving more each month than we have for ages. The average sum being squirreled away each month stands at £92.41 (from £90.12 last year) which is great news.

And if you're one of the many saving regularly on a monthly basis, a regular saving account may be very appealing, particularly as the rates are currently looking pretty healthy.

Best buy regular savings accounts

Account	Interest rate (AER)	Min/max deposit	Interest paid	Rules
Barclays Bank - Monthly savings	4.25%	£20-£250	Yearly	No withdrawals allowed within 12 months. If you do, the rate will drop to 3.03% for the month of the withdrawal.
Loughborough BS	4%	£10-£500	Yearly	Rate includes 1% bonus payable when 11 payments have been made. One withdrawal can be made per year.

Compare regular savings accounts at lovemoney.com

Regular saver accounts are ideal if you're starting to save and wish to do so every month - you can set up a direct debit and not think about it.

And while you have to be prepared to leave your money alone, the rates do make these accounts more interesting. And HSBC has a more generous offer. Regular saver customers can earn 8%AER - but they'll need to hold an HSBC current account.

Fixed rate bonds

And finally, if you don't mind locking your money away for a bit longer in return for a more generous rate, a five-year fixed rate bond could be right up your street.

Account	Interest rate (AER)	Min/max deposit	Interest paid	Rules
Barnsley BS - Online bond	5.1%	£100-£500k	Yearly	5 year bond. Must be operated via the internet.
Newcastle BS - Five year bond (Issue 1)	5.0%	£5k-£500k	Yearly	5 year bond. Must be operated by telephone or internet.

Compare fixed rate bonds at lovemoney.com

Both of these accounts give us the option to earn at least 5% on our savings which is extremely appealing after months of lamenting the poor state of savings.

However, personally I'd be unwilling to tie up my money for such a long time. The base rate is only really going to start rising, in which case lenders will soon start to raise their rates. An instant access account may not pay as well but it would give you more flexibility to move your cash when savings rates start to rise.

Four steps to successful savings

So there you have it, a quick roundup of some of the best savings products on the market.

But it's worth noting that while these accounts are available today, things seem to change on a daily basis. For example, while Leeds BS was advertising its online access account (paying 3.05%AER) just last week, it's now marked as temporarily unavailable.

So as a final note, if you decide to take the plunge and open a new savings account, don't forget to:

1. Note whether your account includes a bonus. If so, mark the date it ends in your diary so you'll be prepared to move that cash.
2. Think about how long you're willing to tie that money up for. For example, if you know you'll need to withdraw some of your cash in a year, don't sign up for a 2-year+ bond and risk the penalties.
3. Where will your money be based? After the Icelandic debacle many of us need to be sure we're covered by the FSCS guarantee.
4. Can you put up with any rules or conditions? Watch out for sneaky catches in the small print.

Happy saving!

Find a best buy savings account at lovemoney.com

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