Don't miss out on the savings showstoppers

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The Independent Online

Knowing where to save your cash used to be straightforward. You'd just put it in a building society or bank account and watch it grow at an unspectacular rate.

Today, though, the ferociously competitive savings market could leave your money behind.

"Saving cash is meant to be the easy bit of investing," says Anna Bowes of independent financial adviser Chase de Vere. "But the bells and whistles on some of today's accounts mean that it's something you [now] have to study."

Lenders continue to up the ante with generous new rates, bonuses and introductory offers. So whether your cash is tucked away in an online, telephone, postal, passbook, tracker or monthly saver account, it pays to keep an eye on your returns.

The 0.25 per cent rise in the base rate last week prompted another burst of activity, with many lenders quick to pass the full amount on to customers.

We're being offered 5.36 per cent on a balance of £10,000 with the AA's telephone savings account; 4 per cent on the same sum in Tesco's instant access savings account; and 3.5 per cent in HSBC's Premier account.

However, these deals come with plenty of provisos: the AA includes a 0.7 per cent bonus for 12 months, while both Tesco and HSBC won't implement the rate changes until 2 September.

"Always watch out for the best deal's headline rate," warns Ms Bowes. "There may be restric- tions on withdrawals and a [temporary] bonus rate."

Some lenders are outdoing the rise in the base rate. From September, Abbey's monthly saver account will pay 5 per cent interest, a jump of 0.5 per cent. Meanwhile, Sainsbury's will increase the rate on all tiers of its Direct Saver account to 5 per cent, a leap of more than 1 per cent for many customers.

With rates like these, there is no reason to stick with outdated accounts. Hunt for the best rates and don't assume that all deals are either good or bad within the same bank.

Halifax's infamous Liquid Gold still pays a derisory rate of interest - 0.7 per cent - but elsewhere within the bank, its online websaver offers 4.7 per cent. Say you had £15,000 in savings, a switch between these accounts would earn you an astonishing £600 a year extra before tax.

Abbey's Investor 30 account offers only 1 per cent up to £24,999, while its direct saver account offers 3.5 per cent interest from 1 September.

If you don't want to have to check your rates every few months, a tracker savings account will at least ensure that you don't miss out on any future rate rises.

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