Ten of the best savings rates in town

We reveal the ten best places for savvy savers to stash their cash.

Savers were given a teeny tiny glimmer of hope earlier this month when the Bank of England chose to keep the base rate at 0.5%.

I'll admit it wasn't anything to get too excited about, and you won't see me leaping up and down for joy on my desk just yet. But at least it's a start.

Savers have had a tough time of it over the past year and, if you're anything like me, you've probably watched in horror as the interest rate on your savings account has gone down... and down... and down.

So the big question is, where are the best places for savvy savers to stash their cash?

The big lock in

If you're after the very best interest rate around, a fixed rate bond is probably your best bet. However, this means you'll need to tie up your funds for a set period. In other words, you'll have absolutely no access to your money for a year or more, so it's going to require some discipline.

But if you think you can manage that, here's what's on offer:

*One withdrawal of up to 25% of the account balance is permitted without penalty.

As you can see, it's still possible to get an interest rate of more than 4% AER. The bad news is that in order to get the top rates, you'll need to lock up your money for longer.

For example the two market-leading accounts - the five-year ICICI HiSave account and Halifax Web Saver - require you to tie up your funds for a whopping five years. And that's something I, personally, don't think is very appealing.

The problem with locking away your money for a number of years is that there's a good chance interest rates will increase in the not too distant future. As a result, you may find that what you thought was a competitive savings account, no longer is. So I'd be happier locking up my funds for one to two years, rather than three, four or five.

For this reason I think the two-year ICICI HiSAVE Fixed Rate Account offers a more attractive deal at 4.20% AER. Or, if you'd prefer, you can also opt to lock up your money for just one year with ICICI and still get a competitive rate of 3.90% AER.

One other point to note is that banks and building societies are becoming a little greedier when it comes to the size of deposit required. In fact, only one account out of the five above allows you to deposit a minimum of £1.

Access all areas

So what happens if you'd prefer to be able to get your hands on your savings whenever you need to? Can you still get a decent interest rate?

The table below shows five of the best instant access savings accounts on the market. I've ignored any accounts that come with complicated catches, such as limiting the number of withdrawals permitted.

As you can see, the interest rates offered for instant access accounts are much lower than those for fixed rate bonds. But it seems that's the price you have to pay for easy access these days. Just bear in mind that because these rates are variable, they could change at any time.

Bizarrely, all of the accounts above also include a bonus rate. Here at lovemoney.com, bonuses would previously have been frowned upon simply because they tend to push accounts to the top of the best buy tables, only to flop miserably once the bonus rate expires.

But bonus rates have increased in size over recent months, and most bonuses now last for one year. So in a climate where receiving a decent savings rate is becoming increasingly difficult, bonuses can be a great way of guaranteeing your interest rate won't fall below a certain level.

That said, one thing you should be wary of is that some bonus rates are variable, while others are fixed. That's why the ING Direct Savings Account wins my vote as it offers a fixed bonus of 2.22%, and an overall rate of 2.75%.

So there you have it - ten of the best savings accounts on the market. Let's just hope that over the next few months, interest rates will start to rise again and savers can finally be given a break. Happy saving!

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