Where to find the highest interest rate savings account

If you want the highest interest rate savings account, you need to find out what your bank is currently paying you. You may be surprised to find out that you're receiving just 0.1% AER. If this is the case, you're certainly not alone. You don't have to accept this poor return and are free to move your money elsewhere to get a more satisfactory rate of interest.

Under no circumstances should you rely on your bank to do what is right for its loyal, existing customers. While they don't want you to move your cash elsewhere, they focus their attention on winning new business from the competition. You'll find that most top rate bank accounts tend to be just an introductory offer that lapses after a year.

The best current accounts are the ING Direct account (3.1% AER) and the Santander eSaver (3.1% AER). Given that you can get hold of your money whenever you like, it's a pretty good deal. You just have to remember to trawl the market for the latest offers after a year has elapsed.

You can get a better return by locking up your funds, but the return may not be worth compromising your ability to get hold of your money. For example, the Post Office 2 year online bond pays 3.96% AER, but you cannot access your funds without paying a penalty. There is a "breakage fee" equivalent to the loss of 180 days' interest if you do need to get hold of your money.

If you haven't already used up your £5,340 cash ISA allowance, you should consider doing so. You could open an online Northern Rock eISA at 3.05%. You can access your money at any time. If you're prepared to tie up your money for 3 years, you can get 3.8% AER. This is a great option, especially if you're a higher-rate or additional-rate taxpayer.

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