No need to keep moving your savings around

Here's five places to stash your cash if you're fed up with temporary bonus rates which force you to move your savings after a year...

There's so much happening in the savings market, it's been hard for us financial hacks to keep up.

The good news is, savings rates are on the up. Egg recently followed in the footsteps of rivals Alliance and Leicester and Birmingham Midshires, and upped the rate on its savings account to 3.25% - even for existing customers.

But we Brits like to moan, and one common gripe that continues to crop up in your comments on lovemoney.com articles is the emergence of 12 month bonuses.

Bonus rates have quickly become a staple of easy access accounts. Providers use them to propel accounts to the top of the best buy tables, in the hope that 12 months later you'll forget to switch when the bonus expires.

I took a quick look at our whole of market savings account search this morning and found that 8 out of the top 10 best buy accounts had some sort of bonus attached.

So what can you do to avoid this savings trap? Here are five solutions.

Nationwide BS Champion Saver account

The most recent account to introduce a bit more consistency when it comes to savings is the Nationwide Champion Saver account.

Instead of setting its own rate, each month, Nationwide collects the five highest branch-based interest rates from eight high street banks (namely Barclays, HSBC, NatWest, RBS, Lloyds TSB, Abbey, Halifax and Northern Rock).

The average of these rates is then used to determine the interest rate Nationwide will pay you for that month, and so on.

The rate is bolstered even further by a bonus of 1.1%, fixed until 31 January 2011, giving you savings an extra boost for 18 months, not the usual 12.

Nationwide's account does provide a breath of fresh air for us savers. But it's important to remember that Nationwide uses branch-based accounts for its comparison.

The best rates, however, are typically found on the internet, and the fact the building society has steered clear of the best buy online accounts puts a sting in the tail of an otherwise good idea.

Plus, when you consider that...

• you need at least £1,000 to open the account,
• you'll lose 60 days' interest if you make a withdrawal
• you're still stuck with a bonus (albeit a longer one)

....the account no longer looks so great. Personally, I'd rather hedge my bets elsewhere.

Investec High 5 account

An even better account is the Investec High 5 account. Unlike Nationwide, its rate is based on the five highest savings rates according to Moneyfacts. No extra bonus rates, just a simple promise that your rate will be among the best buys.

Investec's savings rate changes weekly, and currently stands at 3.11%

However, in order to open one of these accounts, you'll need to be quite well-off, as the minimum opening deposit is £25,000. You also won't be able to access your money unless you give three months notice.

Current account bonanza!

It's not just savings accounts that are after your cash, and there's recently been a raft of current account providers that will offer you better rates than you'd get on your savings.

Alas, these deals also come with a one year expiry date, plus a cap on the amount of money you can earn the higher rate of interest on.

For example, Alliance and Leicester currently offers 6% AER on its Premier Direct account, but this is capped on balances up to £2,500, anything above this earns just 0.1%.

There are a number of ways to resolve the problem. My personal favourite is the Plus account from Lloyds TSB.

You can add this feature to your existing current account at no extra charge. More importantly, there's no expiry date on how long you can earn this rate for.

The rate is variable, but Lloyds TSB has run the offer for several years now, and has never paid less on its Plus account than 2.5%.

The only condition is you have to pay in at least £1,000 into your account each month, and you'll only earn the extra interest on the first £2,500 of your cash.

If the £2,500 limit puts you off, you could always opt for Lloyds TSB's Vantage account instead.

Vantage pays up to 4% AER, as long as you keep a balance of £5,000 to £7,000 in your account. This is nearly a percent better than most instant access accounts, and if you pay your salary into this account, has the added benefit of you not having to worry about moving your cash

Again, you can add Vantage as long as you have a Classic, Select, Gold, Platinum or Premier account, and pay in at least £1,000 a month.

And finally...

If you don't like dealing with interest rates and AERs, the Halifax Reward Current account pays you £5 a month, as long as you credit the account with at least £1,000.

It doesn't pay any interest on credit balances, and may not be as good an incentive as some of the other deals out there.

But this is a savings tortoise, and after year two, the rewards will be better than the temporary peks offered by other providers, so you won't need to worry about switching your account again! Hurrah!

More: Savings war hots up! / The best home for your savings