Savings

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Best savings deals

By Rachel Williams

Following the latest interest rate rise savings accounts are looking more attractive than they have for some time, but with many providers failing to pass on the rate rises, it still pays to shop around to make sure your money is working as hard as it can.

If you've not made the most of this year's ISA allowance, your first port of call should be a cash ISA to ensure you don't pay tax on your interest. The best current rate for an instant access account is 6.3% from NS&I.  No notice is required to get your hands on your cash, but the minimum deposit is £1000. If you can't commit that much, Egg is paying 6.05% on its cash ISA which requires a minimum deposit of just £1.

Even if you have used your £3,000 annual allowance there are still some good deals to be had on instant access accounts. Manchester Building Society is paying 6.26% on its Premier Postal Account. However, once again this does require a £1,000 minimum deposit.

Online

A more accessible option is therefore the Icesave online savings account, which has a minimum deposit of £250. It pays 6.2% and unlike many other accounts on the market is backed by a rate guarantee. It guarantees that the interest rate paid on all balances over £250 will exceed the Bank of England Base Rate by at least 0.25% until 1 October 2009 and will not be lower than the base rate until 1 October 2011.

Save a fixed amount

The very best savings rates are reserved for those who are able to commit to saving a fixed amount every month and can tie up their money for up to a year. Skipton Building Society is paying 7.55% on deposits between £10 and £150 a month with its Christmas Saver Account. As its name suggests this offer is limited and the rate only applies until November. A more long-term option is available from Abbey. It's paying 7.25% on its fixed monthly saver  - the rate lasts for 12 months and savers need to be able to commit to saving between £20 and £250 a month.

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