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Shop around for the best savings account interest rate

With the UK economy stagnant, it's unlikely that the Bank of England will be raising interest rates any time soon. That's bad news for savers, but there are still a few decent rates out there. You need to look carefully to find the best savings account interest rate for your nest egg.

With deals and rates changing all the time, it's advisable to check the comparison sites like www.moneysupermarket.com or www.moneysavingexpert.com for the latest offers. Note that if you save with a UK-based building society or bank, the first £85,000 of your savings are protected by government regulation.

The return you can expect for your money depends on how willing you are to tie it up for any length of time. If you don't need ready access to your cash, it's worth considering avoiding the saving accounts altogether and looking at a bond, or even a shares investment.

The best savings account deals on offer at the moment are online easy access savings accounts with the Coventry Building Society (www.coventrybuildingsociety.co.uk) and the Newcastle Building Society (www.newcastle.co.uk). Both pay 3.15%, but both include a bonus element in that rate, so you will need to rethink your savings plan after the first year, or end up on a poor interest rate.

Northern Rock (www.northernrock.co.uk) offers a savings account that can be opened and operated by post. It pays 3.11% (including a bonus of 1.5%) and there is a minimum deposit of £1,000. It's not quite the best savings account interest rate out there, but the account requires no notice of withdrawal if you need your money in a hurry.

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