Savers need to be savvy

savings rates have plummeted in recent months, but there are still some good deals to be found, especially if you're willing to tie your money up for a year or more.

The Indian bank ICICI, for example, is offering 4.18 per cent on its two-year fixed-rate savings bonds, and 3.9 per cent on its one-year bond. If you're worried about security, you can sleep easy knowing ICICI is a member of the UK Financial Services Compensation Scheme, meaning the first £50,000 of your savings is guaranteed.

If you need instant access to your cash, the best rates you can get are about 3 per cent – offered by the likes of Newcastle and Scarborough building societies – but these rates are likely to fall over the next few days in reaction to yesterday's interest rate cut.

Today's best savings rates might sound paltry compared with the 5 or 6 per cent that was on offer a year ago, but it's worth remembering that inflation is lower now. If you're earning any return on your money, you can take comfort from the fact that it's keeping pace with the cost of living. A year ago, a 4 per cent rate would only have kept your savings up with inflation.