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Savings Accounts

If you are saving money over a long period of time the enemy is inflation which makes the money that you have worth less in real terms over time. Money left in a box under the bed will not buy you as much in 5 years as it will today, not to mention the obvious insecurity. To combat inflation, savings accounts pay interest on the money that you save. The higher the interest rate the more money you are paid and the better you are protected against inflation. Read more...>

	Kaupthing Edge Fixed Rate 7.15% AER fixed term savings account - 6m, 1 or 3 years	7.15%	6m, 1 or 3 years
	Alliance & Leicester eSaver 6.60% AER when no withdrawals are made	6.60%	Instant Access
	Kaupthing Edge 0.3% higher then the Bank of England base rate until 1st Feb 2012	6.55%	Instant Access
	ING Direct A high interest rate that stays high	6.50%	Instant Access

The lowest rates of interest are paid on current accounts and that is why customers look to move their money to special savings accounts. The natural assumption for anyone choosing a savings account would be to look for the highest interest rate on the market but unfortunately there are always other factors to consider. Even though you are saving money you may want easy access to it and the general rule of thumb is that the longer you can agree to not touch your savings the higher rate you can get. Other considerations will be the amount of money that you are saving, as larger amounts also tend to attract higher rates.

If you want your savings account to give almost as much instant access to your money as a current account then you will get a lower rate than if you are able to commit to having no access to your money for a period of perhaps 5 years. 

The rate shown with most savings accounts is the Annual Equivalent Rate (AER) which is very useful for comparisons.  The AER takes into account any temporarily high introductory offer that may drop away and it also includes the effects of compounding on your interest over months to give you the true rate of return that you will see by the end of the year.