With inflation having risen for the first time since February and the Bank of England base rate looking set to remain at 0.5% for the foreseeable future, savers need to make sure their money is working as hard as possible. But with providers such as National Savings & Investments, Coventry Building Society and Saga having withdrawn some of their best deals this is getting harder.
Basic rate taxpayers need to be earning at least 1.88% on their savings in order to make a positive return once tax and inflation are factored in, while those in the top rate band need an account paying 2.50% or more. Yet around 75% of savings accounts are paying less than 1.88%. The average no notice account is paying just 0.15%.
Kevin Mountford, moneysupermarket.com's head of banking, said: "We expected to see savings rates creep down before the end of the year, but if they go any lower savers will find it almost impossible to beat the effect of tax and inflation. Savers therefore need to be more attentive than ever to ensure they get the best return possible."
So where should you be putting your money?
The highest rates are available on fixed rate savings accounts so if you've got money you won't need to touch for a few years, these are well worth considering.
Skipton Building Society's Fixed Bond is paying 5.35% until 30 November 2014. And if you'd prefer to secure your rate for slightly longer, Yorkshire Building Society's 5-year Fixed Rate Bond has a rate of 5.30%, fixed until 28 February 2015.
While some people may be attracted by the fact they can achieve a guaranteed return for five years, for others it may be too long - neither of these accounts allow withdrawals during the fixed term. Early closure isn't permitted either.
Barnsley Building Society has the leading four and three-year deals. Its four-year Online Bond is paying 5.00% - this is fixed until 30 November 2013 - while its three-year Online Bond is fixed at 4.80% until 30 April 2013.
The rates on shorter-term deals are slightly lower, although still competitive. If you only want to lock your money away for two-years, the highest rate you can get is 4.25%. However a number of providers are offering accounts paying this. These include Principality Building Society, the Post Office, Birmingham Midshires and the AA. State Bank of India has the most competitive one-year deal at 3.75%.
What if you don't want to lock it away?
If you'd prefer to retain access to your money, or are looking for an account you can pay money into (fixed rate bonds are aimed at those with a single lump sum to invest) you can still earn more than 3.0%.
Bradford & Bingley's Online Notice account is paying 3.30%. This doesn't allow instant access to your money - you must give 60 days' notice before a withdrawal is made, but additional deposits can be made at any time. However, it's worth noting that like all the leading easy access accounts, the rate does include an introductory bonus. In this case it's 2.80% and it lasts for 12 months so you'll need to move your money again at that point as the rate will then drop to just 0.50%.
Another option, if you would prefer an account which allows immediate access to your money is Sainsbury's Online Saver at 3.20%. Again, the rate is an introductory 12-month offer - it drops to 0.50% once that ends and although you have instant access to your savings, only three penalty-free withdrawals are allowed during the first year.
For details of other leading savings deals visit our savings channel.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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