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• A to Z of Savings Accounts

There is a huge range of savings accounts to choose from, so before depositing your money, decide what you want the account to do for you.

Are you investing for the short or the long term? Do you want income or growth? Is the money destined for you or someone else, such as a child? Are you an older investor? Are you a non taxpayer? Do you want the interest paid gross?

All these considerations will affect which type of account is best for you.  If you want a tax free account, consider using up your Cash ISA allowance of £3,600 (2008-09). If you are saving for a child, have you maximised usage of the Child Trust Fund into which you and other relatives of the child can be in an extra £1,200 a year?

 If you have mopped up these tax free allowances, consider National Savings & Investment products, some of which are tax free. Others are taxable, but pay interest gross.

If you are prepared to tie up your money for a year or more, a fixed rate term account will normally pay a higher rate than an instant access, but in either case, it is  worth shopping around for the best rates.

If you  have a large lump sum to deposit, some banks and building societies offer tiered rates of interest according to how much you save. That said, there are also some very competitive rates even on instant access accounts requiring a deposit of only £1, so be sure to shop around using our Compare tools.

Online and telephone based accounts also tend to pay higher rates than branch-based accounts which are expensive for the bank or building society to run.

If you can afford to save a regular amount each month for one year, a number of banks and building societies offer regular savings accounts paying very high rates of interest. But remember, you only get the latter on the amount saved, which is typically £250 a month.

Finally, watch out for introductory bonuses. These are frequently used by banks and building societies to boost the headline rate of interest on their accounts for the first 6 to 12 months. This propels their accounts into the all-important best buy tables, but after the bonus rate period expires, the account will revert to an inferior rate.