Don’t be a mug - shop around for the best savings rates

By shopping around for the most competitive savings rates, your hard earned cash could be earning 5.35 per cent more than on the worst paying accounts according to Find.co.uk, consumer finance portal.

The top instant or easy access accounts (Birmingham Midshires’s Internet Easy Access and ICICI Bank’s HiSAVE) are paying 5.45 per cent on a minimum investment of just £1.

By contrast, the worst paying accounts (Darlington’s Instant Access, First Direct’s Everyday Savings and First Direct’s Savings) could leave your money languishing on a paltry 0.1 per cent.

And you don’t have to put your money on notice to obtain the best rates as there is little difference between the most competitive instant and notice accounts. For example, the top paying instant or easy access account, on a minimum balance of £1,000, pays 5.54 per cent compared to 5.57 per cent in a notice account. However, the average notice account does pay around 0.4 per cent more than its instant access counterpart.

Providers tend to pay more generous rates on their ISA accounts, so if you haven’t yet used your £3,000 cash ISA allowance this year, be sure to scour the market for the best rates.

The top paying instant or easy access ISA account from National Savings & Investment’s Direct ISA pays 5.55 per cent on a minimum balance of £1,000, compared to just 1.05 per cent with First Trust Bank’s Mini Cash ISA.

Cash ISAs are also completely tax free, so the interest rate quoted is what you get, whereas ordinary savings accounts have 20 per cent tax automatically deducted and higher rate tax payers have to pay a further 20 per cent via self assessment tax returns.

Another way of accessing high interest rates is to invest in a regular monthly savings account. By investing just £10, £50 or £100 a month, you can earn 7.25 per with Ipswich’s Olympic Saver, that’s almost twice as much as Loughborough’s Regular Savings Account.

However, regular savings rates of up to 12.5 per cent are available, if you also have your current account with a specific provider. Higher rates can also be obtained on certain instant and easy access accounts subject to various conditions and restrictions and for special age groups.

Kate Marsden, Marketing Director of Find.co.uk said: “If you fail to shop around, your money could be missing out on up to 5.35 per cent interest. So don’t be a mug and allow your money to languish in one of the accounts paying only 0.1 per cent interest. Take a look at www.find.co.uk/ for up-to-date savings information.”

All interest rates quoted are the gross AER (Annual Equivalent Rate) and were correct as at 10 January 2007.