A few weeks ago I decided to start looking into savings accounts properly. For the first time in 5 years, I will soon – I hope – actually have money to save after seriously paying down debt. If I’m totally honest, I was completely at a loss where to turn for advice, so I engaged myself on a rate finding mission. The credit crunch has brought the Bank of England base interest rate to its lowest since records began – yet there are still good products out there if you don’t mind rate chasing after the introductory offers run out. I’m not adverse to doing this, as it’s a small amount of effort for potentially, hundreds of pounds of profit a year.

After weeks of research, I’ve concluded and personally recommend the following:

Instant Access Savings - ING Direct are by far the best provider right now in terms of rates and flexibility. They are offering 3.2% AER (3.16%) on their standard savings account with no limits on access. After the initial 12 month period, the rate drops to an appalling 0.5% which effectively makes it a BoE base rate tracker. However for those initial 12 months, you’ll be doing well with ample time to reassess nearer the end of the introductory offer. Their online interface is amazing, and it makes it nice and simple to sub-divide your ‘account’ into pots for specific things.

One word of caution however: Don’t be fooled by their claim you can have an account open “in about 10 minutes”! It might take 10 minutes to fill in the online paperwork, but it takes many weeks to get it activated and ready for use! Believe it or not, this includes snail-mailing a bank cheque (cheques? I had to order a new cheque book just for this! How antiquated… but worth the effort).

If you’re not keen on ING, or want a better raw rate, consider Egg: They’re offering 3.25% again fixed for the first 12 months but with slightly less ‘zing’ in their interface. Egg are part of the Citigroup of companies.

Regular Savings Account – This is basically a product that gives you an incentive to save every month, usually from £25 to £500 a month. If you don’t make a deposit, then you get penalised for that month. If you’re able to keep it up for the year though, they can pay really well. Right now Halifax are offering 5% and win hands down against the competition.

Cash Mini ISAs – Finally, no savings roundup would be complete without mentioning ISAs. If you don’t have one this year, there is still plenty of time. It’s a tax-free way of saving, and at the moment the best rate seems to be the Barclays Golden ISA, paying 2.58% AER. If you’re new to saving like me, then fill your cash ISA first! It’s tax free and a great way to ensure the government doesn’t start pinching your hard earned pennies. Each ISA can hold £3,600 of cold hard cash, and you get a new one each year.

Most banks are paying around much the same rate at the moment, so to keep things simple check your own bank before moving elsewhere. For the sake of a few percentage points, it’s probably not worth the hassle of transferring any you have right now.

Found better rates? Tell the world in the comments!

Quite often I’ll sit here for 20 minutes or so having hashed out a post, changing the order of things, changing words and generally trying to make it flow on paper how it sounded in my head. I was reviewing the wording on my post about my method of fuel hedging just now, when a family member walked in.

They saw the title of the post and looked at me wide-eyed, a hint of genuine fear in their voice, as I explained the general premise behind it in a few sentences. “I hope you’re not risking your money”, they said, despite the fact the only financial product I’d mentioned was “high interest savings account”.  They saw hedging and the fact I was not using my “every day” bank to do this, and immediately decided I was gambling with my life savings and stood to lose thousands.

To an extent I understand. I’m no financial genius, but their concern comes not from my history, but theirs. They got burned in 2006 and lost over £1,500 by using a financial investment product they didn’t understand – which incidentally was recommended by their Independent Financial Advisor – and assumed it was safe on that basis. While I’m sure it was explained that they were ‘investing’ rather than ‘saving’, it likely didn’t register. The difference between the two terms to lay-persons is minimal? Perhaps even none?

Since this event, they have an inherent distrust of anything financial that might make or save them money in real terms. Their life savings sit in a savings account that they’ve had for decades, with a bank they’ve been with for decades, that pays them a measly 0.75% APR. I’ve suggested time and time again that they move it to somewhere that pays 5%, convert it to 3 year bonds, or a combination of both, but they view it as “too risky”. In their mind, moving again could cost them dearly, despite the fact not moving is costing them dearly.