Keep a close eye on the interest on your savings account

Is your nest egg looking tinier than a quail's egg these days? Interest on a savings account is not going to make any of us rich. In fact it can be a struggle to find an account that will even keep up with inflation. Look out for the attention-grabbing interest rates though, there is usually a catch.

If you use comparison sites like thisismoney.co.uk, moneysupermarket.com or moneysavingexpert.com, it's easy to keep up to date with the latest products on the market, but hard to get too excited about what's available.

Banks and building societies have been reluctant to offer even a marginally attractive rate to savers since the credit crunch. With the government trying to pressurise them to offer more small loans to business and more mortgages to first-time buyers, it might be a year or 2 before the climate improves for savers.

At present, the Derbyshire Building Society (thederbyshire.co.uk) are offering 3.18% on easy access savings accounts, while Northern Rock (northernrock.co.uk) are offering 3.11%.

The downside with both these deals, and with most of the higher rates being offered is that, after 12 months, the rates revert to a much lower return. The policy, common in the banking industry, is called "suck and slap". Banks suck you in with an eye-catching rate, and then slap the rate down.

It has encouraged a new kind of saving whereby savers have to become nomads, moving from bank to bank every year in search of a half-decent rate of interest on a savings account.

The alternative is just sticking all your savings in that piggy bank. At least it makes a satisfying jingle when you shake it.

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