My favourite savings accounts

If you're looking for somewhere to put your savings, you'd do well to choose one of these accounts...

When it comes to base rate decisions, I'm no clairvoyant. But if five cuts in as many months is anything to go by, Thursday's Monetary Policy Committee meeting could signal the sixth.

This continued decline in interest rates has prompted many of us to sit up and check the rates we're getting on our savings, and over the past few months, we've seen many of you rush to our savings centre looking for better deals.

Now, supermarket Sainsbury's has also put its hat in the savings ring, and until 17th March, you can take advantage of a better rate of 3% AER on its Internet Saver.

This rate is guaranteed to remain 2% above the Bank of England base rate for 12 months, and though you need at least £5,000 to qualify for the account, the good news is existing customers can also apply for the deal.

Sound good so far? Let's examine the account a little closer.

Benefits of a bonus

Back in January, I told you why putting your money in a savings account with a bonus could prove a wise move. After all, according to the Bank of England, average interest rates on instant access and notice accounts now stand at just 0.51% and 0.29% respectively.

With the base rate heading just one way at the moment, a bonus guarantees you a minimum return - even if the base rate falls to zero.

But what's so special about Sainsbury's? After all, it isn't the market leader. That crown belongs to Egg, which currently pays 3.35%, including a 2.1% bonus.

However, unlike Sainsbury's and rivals such as ING which offer fixed bonuses, Egg's bonus is variable. This means if it wanted to, Egg could withdraw or lower the bonus rate at any time - not good if you're looking for rate security.

One vital flaw

Before you sign up, it's worth highlighting one major drawback to the Sainsbury's account. If you make a withdrawal, the rate immediately reverts to its standard rate of interest - currently 1.25%.

This can put a nasty sting in the tail of what seems a good deal, so you should stay away if you intend to dip into the account from time to time.

However, if you have the £5,000 minimum to invest in the first place, my guess is you're also looking for somewhere to store your cash, as opposed to a pot you can nibble away at.

In this way, you should treat the Sainsbury's account the same way you'd treat a fixed rate bond, and not touch the money for the 12 month period - or you will lose out.

Consistency

Still, Sainsbury's should also be commended for its strong interest rates, and its Internet Saver has been voted the most consistent internet account over the past 36 months by Moneyfacts.

This may not sound like much, but as customers of institutions such as ING will be all too aware, the best buys six months ago can quickly fade from view, with rates dropping down quickly once they've secured your cash.

By offering a consistent (if not always market leading) rate, Sainsbury's has managed to give its customers the best overall returns on internet savings over the past three years. While this isn't a measure for future earnings, my guess is it will continue to offer good rates for years to come.

So, if you want to take advantage of this offer, make sure you apply before 17th March. Obviously, if you need easy access to your cash, you'll probably be better off going for one of the accounts mentioned above.

If, on the other hand, you want an account which guarantees a minimum level of returns over the next 12 months, and (hopefully) consistent savings rates long after the bonus expires, then perhaps it's time to put Sainsbury's in your shopping basket...

More: Top savings accounts for the new financial age | What your bank doesn't want you to know

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