Eight smashing savings accounts

Got some cash? Want to save it? Then here are eight excellent options for you - no matter how much cash you have or how much you plan to save.

While a lot of us are nervous about trusting our hard earned cash to the UK's banks, stashing it under the mattress isn't really a good idea. So what should you do if you want to start saving?

Where is the best place for your cash?

Well as always this all depends on your needs. Will you need to access your money, how long are you willing to tie it up for, and is tax an issue?

Let's take a look at three of the most popular savings vehicles:

Instant access savings

Most of us will have one of these already - a bog standard savings account.

The benefits are clear - they're easy to open, easy to access, and importantly you can withdraw your money without penalty at any time.

On the downside the rate of interest earned in an instant access account tends to be far from inspiring as you're effectively paying for flexibility.

Increasing numbers of providers are artificially inflating their rates by adding huge, short-lived bonuses in order to get into the best buy tables.

And some are even making a mockery of the term "instant access" by limiting the number of withdrawals you can make within a year.

So which is the best instant access account if you have just a humble pound?

If you have £1+

Well, according to the Moneyfacts best buy table, the Egg savings account is top of the list. Paying a generous 3.25% AER you can invest from £1 to £1m and you can withdraw your cash when you like.

On the downside this includes a whopping 12-month 2% AER bonus, and as the rate is variable it can change at any time. But for sheer flexibility it ticks all the boxes - and the rate's pretty impressive, too.

If you have £1,000+

But what if you have a bit more to salt away?

Check out Alliance & Leicester's (A&L) Online saver Issue 5. Paying slightly less at 3.15% AER, you can save from £1k to £2m with instant access to your money.

On the downside this does include a 12 month, variable 1.65% AER bonus. And what's the point of a variable bonus?

By the way, if you're only interested in a high rate, the Coventry BS' First Class Bonus account pays an impressive 3.3% AER on deposits of £1k to £250k (including a 1.29% bonus). However, as it only permits four penalty-free withdrawals in a year (further withdrawals are charged at 50 day loss of interest) this isn't really what I'd deem a true, instant access account.

If you have £25,000+

If you have £25,000 or more to invest, I like the Investec High 5 Account. It pays the average of the five highest savings rates according to Moneyfacts, and currently stands at an impressive 3.04% AER. The downside is you'll need a £25,000 deposit and must give three months' notice for withdrawals. Find out more...

Regular savings accounts

So far so good - the Egg account, in particular looks pretty good to me. But can we do better?

Yes, for some savers I believe we can. Anyone starting to save (and thus without a lump sum to deal with) who doesn't need access to their cash could look at regular savings accounts.

A regular saver generally means you save a set amount (usually between £25 and £250), each month for a year. Stick to this savings plan and you'll earn a more impressive rate of interest than in an instant access account. And as this is a fixed, rather than variable rate you won't need to worry about interest rate fluctuations.

However, make any withdrawals during the year and you'll pay harsh penalties. And as you can't save a lump sum to begin with, the total interest earned may not seem as impressive.

So which is the best regular savings account?

Well some of the highest rates are offered by two banks from the Santander Group - Abbey and A&L. Abbey's Super fixed rate monthly saver and A&L's Premier monthly saver each offer an outstanding 6% AER.

But they come with huge catches - to open one you'll need to take out either Abbey's Reward/Preferred In Credit Rate current account, or A&L's Premier Direct or  Premier 50 current account at the same time. Yikes.

Not what I'd call a straightforward regular savings account.

But don't worry, we can do better. The Halifax Regular Saver lets you save between £25 and £500 per month and pays a healthy fixed rate of 5% AER. Like most regular savers if you miss a payment your interest rate will plummet (in this case to 0.1%). And you will also have to open a Halifax savings account, as when the 12 months are up your money is swept into it.

And Lloyds TSB customers can benefit from its Monthly Saver account. It pays a fixed rate of 5% AER, takes deposits of £25 to £250 per month and interestingly allows customers to make withdrawals during the term with no penalty (however it's worth noting that any money withdrawn cannot be replaced).

Cash ISAs

Well in a way, yes. One thing we haven't mentioned is the effect of tax on our savings. A 5% AER rate is really only 4% to a lower rate taxpayer, and a measly 3% to a higher rate taxpayer, after tax is paid. Which is why my last option - the Cash ISA is such a popular choice.

Everyone over 16 can save up top £3,600 in one (£5,100 from next April) and all interest is earned, free of tax. If you're a taxpayer, a Cash ISA can therefore be the sensible choice.

Manchester BS heads up the Moneyfacts best buys, offering 3.26%AER (including a 0.8% bonus) on its Premier ISA - although you'll need £1k to open one and be prepared to give 45 days notice should you need to make a withdrawal.

And for savings of £1 or more, Standard Life bank is paying 2.65% AER on its Cash ISA Direct Access - and as it is instant access you can get at your cash whenever you like.

So there you have it - three different ways to save those hard earned pounds.

Happy squirreling!

Find a better savings account at lovemoney.com

More: The great Cash ISA dilemma | The top ten fixed rate bonds