Make your savings work harder in the UK.

Finding the best savings deals.

With banks making a concerted bid to increase their cash reserves, savings rates are at a seven-year high. Many financial providers are offering easy-access savings account paying 6.5 per cent or more; and if you're happy with tying your money up you may be able to make even more.

In other words, it's a great time to open a savings account - so why are so many of us failing to grasp the opportunity?

According to research for Alliance and Leicester, 19 million people in the UK allow cash to accumulate in their current accounts. Of these, three million have between £500 and £1,000 which could be earning a significant amount of interest elsewhere. If this sounds like you, perhaps now is the time to mend your ways and transfer your cash into high-interest savings accounts.

But how can you get the best deal?

Recently, rates for fixed-term account have seen the biggest rises. Alliance and Leicester offer a lucrative one-year fixed rate bond, while West Bromwich Building Society is also offering good deals on fixed rate accounts. The downside with this option is that is often requires you to keep your money tied up for a certain amount of time - six months, in the case of West Bromwich. The minimum deposit amount also tends to be high.

The alternative is to go for an easy access account - you will probably get less interest, but your money will be there in case of emergencies. Many such accounts also ask for a relatively small initial deposit. NatWest is currently offering a savings account of this sort, with an interest rate of 6.5 per cent AER for the first year if you are prepared to bank online.

To get the best deal for your savings, it's important to shop around. There are some great deals to be found online, with internet savers often enjoying interest rates at least 0.25 per cent higher than high street accounts. You should also consider your age and status before applying for a savings account - over-50s can get access to some fantastic deals, as can high earners.

Finally, make sure you consider the safety of your money before depositing it in a single account. Following the Northern Rock crisis, the maximum level of compensation you can receive for a deposit placed in a bank that goes bust has been set at 100 per cent of the first £35,000. You may therefore wish to consider splitting your cash between a number of institutions.







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