Savings war hots up!

Egg has upped its savings rates for both new and existing customers. Find out who you should be saving with at the moment...

Those boffins at Egg have been quite busy recently.

First came the return of Egg Money - the credit card which offers 1% cashback on purchases, a wide range of other benefits, plus wider acceptance in shops than nearest rival Amex.

But Egg's all singing, all dancing new card comes at a price, and new customers will have to fork out a fee of £12 a year to enjoy these benefits.

This time, Egg has hatched an even better plan, and in an attempt to bag the top spot in the best buy tables, has upped the rate on its Savings account from 2.8% to 3.25% AER, including a 2% fixed bonus for 12 months.

But with so much going on in the savings market at the moment, is this the best you can get?

Here are the top five easy access accounts:

It's pretty tight at the top of the tables, and there's only 0.25% separating the top five savings accounts.

But there's more to the top five than meets the eye, and if you want to find the best account, you're going to have to look beyond the headline rate.

When a market leader isn't a market leader

The current market leader is Coventry Building Society's 1st Class Postal account, which pays 3.3% AER on balances from £1,000.

But as I wrote in Avoid the top two savings accounts, there are more catches than benefits when it comes to this account.

For example, you can only deposit amounts of £1,000 or more each time, and if you want to make a withdrawal, it must also be above £1,000. Plus, you can't withdraw cash from a branch - they have to post it to you, in the form of a cheque.

I think this is pretty ridiculous for an 'easy access' account, and personally I wouldn't touch it with a barge pole.

So, my vote goes to Egg, and as long as you're happy to run your account online, you'll earn 3.25%. That's nearly seven times the current base rate - only 0.05% less than the Coventry account.

Not just brand new customers

This time, Egg is also being good to its existing customers, and if you currently earn 2.8% AER, your rate will also be bumped up to 3.25% from August 7th.

However, this only applies to customers who opened a savings account after 26th June this year.

If you opened your account before 26th June, you can still benefit from the higher rate, as long as you open a fresh account and deposit 'new money' (i.e., cash not already held with Egg) into it.

This is pretty cheeky, but it's still better than the likes of banks such as ING, which doesn't let existing savers take advantage of the rates offered to new customers.

If you don't fancy putting all your eggs in one basket, the Alliance and Leicester Online Saver Issue 5 account and the Birmingham Midshires Telephone Extra account both pay 3.15% AER.

Both include a bonus of up to 2.65%, which lasts for one year. The A&L account must be operated online, while if you opt for Birmingham Midshires, you'll have to run your account over the phone.

If you have a lump sum to save, and like to take a monthly income from your savings, Birmingham Midshires also lets you earn interest monthly.

All this talk of 12 month bonuses may put you off switching accounts, but look on the bright side. The base rate is at a historic low of 0.5%, but you can still easily earn over 3% on your cash.

The bottom line is, providers are still keen to get your hands on your money. So why not cash in?

More: The best home for your savings / The best accounts for regular savers