The 12 best savings accounts

In a bumper savings guide, Alison Hunt rounds up the best Cash ISAs, the best bonds, the best instant access accounts and the best places for your children's savings.

With interest rates at a miniscule 0.5% and savings accounts paying the least they have for years, it's no wonder that so many of us feel like stashing our cash under the mattress! But it's worth taking a little time to sort your finances out - at least then you'll know your money is working as hard as it can.

But what if you don't have any savings and have never saved? Rest assured - you don't need to be Warren Buffett to start. Just £1 can get you on your way and once you see some interest appear you'll be hooked! And it's so easy to get started.

Cash ISA

Top of your list should be the Cash ISA. Everyone over 16 can open one of these and as you don't pay tax on the interest earned, you'll keep more of your hard earned cash.

Most of us can save £3,600 in the 2009/10 financial year, but if you were born before 5 April 1960 I have good news - you can now stash up to £5,100 away from Alistair's grasp (this will apply to us all from 6 April 2010).

My favourite instant access Cash ISA of the moment is from Standard Life - it pays a healthy 2.65% AER on deposits of £1+, with no short lived bonuses or penalties should you need to withdraw your cash. It also allows transfers in.

Alternatively, the ING Direct Cash ISA pays 2.5% AER (including a 12 month, 1.47% bonus).

If you're happy to tie up your cash for a longer period, Principality BS has a 3-year Direct Fixed Rate Postal Cash ISA, paying 4.2% AER on savings of £1+.

And Leeds BS is paying a whopping 4.6% AER on its 5-year fixed rate ISA (Issue 15), which also allows you to withdraw up to 25% before maturity without penalty.

Instant access savings accounts

Filled your Cash ISA? Or need to create an emergency fund and don't want to risk your ISA allowance? Then a good, instant access savings account could be just what you need.

Unfortunately, if you'd like to earn a decent rate you'll have to put up with a short-lived bonus.

Top instant access accounts of the moment include the Citibank Flexible Saver Issue 6, paying 3.3% AER, (including a 12 month, 2.25% bonus), and the ING Direct Savings account, paying 3.2% AER (including a 2.66% bonus for 12 months).

Both accounts allow deposits of £1-£1m, however the ING account's rate is fixed (Citibank's is variable).

Bonds

If you'd prefer to lock your money away to earn a higher rate, a bond could be a good option.

For a short term option, the government's NS&I Guaranteed Growth 1 year bond (issue 48) currently pays a market leading 3.95% AER.

And if you're willing to tie up your cash for 5 years, Skipton BS is currently paying 5.35% AER on its 5-year, fixed rate bond. Both bonds require a minimum deposit of £500.

Current accounts

But there is an alternative to savings accounts and ISAs. With banks battling to attract our cash some are offering fantastic rates of interest on their current accounts - with some far higher than any instant access account. Stash your savings here and you have flexibility to withdraw your cash should you need to, with no penalty.

Top paying current accounts include Alliance & Leicester's Premier Direct account paying a staggering 6% AER on balances up to £2,500 (you'll earn just 0.1% on sums greater than this). This rate is fixed for one year - after this you'll earn 1% AER. You'll need to pay in at least £500 a month to qualify.

Sister bank Abbey also pays a fixed, 6% AER on its Preferred In-credit Rate account, although you'll need to deposit at least £1k per month to qualify.

It is worth pointing out that it takes a disciplined person to save in a current account - it's all too easy to dip into that hard saved cash.

Kids' savings

And finally, if you have kids they'll no doubt have some savings - so make sure the rate they're earning is the best they can. Top instant access savings accounts for children include Chelsea BS' Ready Steady Save account, paying 2% AER on sums of £1+.

But if, like most kids they won't need to access their cash very regularly, it could be worth tying it up for longer to earn a better rate.

My top pick is a one year bond - the Halifax Children's Regular Saver which currently pays a healthy 6% AER on sums of £10+. You'll need to deposit between £10 and £100 per month to qualify (miss a payment and the account will be closed) and relatives can also open an account for your child.

R85

But don't forget to complete (and hand in) an R85 form for your children and for anyone that doesn't pay tax to ensure you keep all of your interest.

So don't let your cash languish under the mattress - open a market leading savings account and start earning interest, today!

Get help from lovemoney.com

If you need a bit of help getting into the savings habit, we can help.

First, adopt this goal: Build up an emergency savings pot

Next, watch this video: How to save when you've got no money

And finally, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

Earn up to 3.3% AER with a savings account from lovemoney.com

More: Brilliant bonds for all savers | How to save when you've got no money | Build up an emergency savings pot