Saving options

Where are the best places to put your savings if you want to access your cash?

Generally the best home for your savings is in a Cash ISA (Individual Savings Account). Cash ISAs are tax free savings vehicles which is beneficial if you are a taxpayer. Even without the tax advantages the interest rates on Cash ISAs tend to be higher than normal savings accounts.

There are however some restrictions to Cash ISAs in that the maximum you can pay into one this tax year is £3,000 although this limit will increase to £3,600 from April 2008 providing you don't pay in more than £4,000 (£3,600 for 2008) into a stocks and shares ISA.

Another popular place for savings is an instant access account. The big advantage of these is that you can withdraw your money quickly and easily. The main disadvantage of instant accounts is that they tend to offer lower rates of interest compared to Cash ISAs and other forms of savings accounts.

If you are looking for a higher rate of interest than that offered by an instant savings account then either a regular savings account or a notice savings account should meet your needs.

Regular savings accounts are ideal if you want to save the same amount of money each money whether it is for a car, a holiday or just a rainy day. As you are committed to paying in the money for a specific period (normally a year) the banks tend to reward you with a higher rate of interest than an instant access account.

Notice accounts will also pay you a higher rate of interest compared to an instant access account and these are good if you do not want to access your money for a period of time. This notice period can vary from a few days to several months. Normally you can still withdraw money from a notice account but the bank will penalise you by reducing the interest on the account.

In general the information above will be accurate but there will be exceptions to the rule, for example, when a bank is promoting its new instant access account it may offer a higher rate than some of its competitors do on their notice or regular savings account. It is therefore best to spend a bit of time looking to find an interesting home for your money where it can work for you and not the bank.