Ten safe saving accounts

By SYLVIA MORRIS, THIS IS MONEY AND DAILY MAIL SAVINGS EXPERT
Updated: 05:37 EST, 9 October 2008

Savers have been swept up in a tide of panic about their money. The collapse of Icelandic bank Landsbanki has forced thousands of savers to look for secure homes for their cash.

Savers have been swept up in a tide of panic about their money.

Last week it was Ireland taking the lion's share of savings as it offers a 100% guarantee. Others have headed for Northern Rock and National Savings & Investments, where the UK Government guarantees all money.

But the fact is that most savers need have no concerns at all. The Financial Services Compensation Scheme guarantees the first £50,000 per person at UKauthorised banks.

And through its actions with Northern Rock and Bradford & Bingley, the Government has shown that if push comes to shove, it will take action to protect all savers' money.

However, if you have more than £50,000 saved or simply want to spread your money around, here is Money Mail's guide to ten accounts you can use to maximise your interest rate and safety.

These accounts all have their own compensation allowance from the regulator.

EASY-ACCESS HIGH STREET

Bradford & Bingley Good for Life pays 4.2% (5.25%) on minimum £1,000. It guarantees to pay at least base rate — currently 5% — plus 0.25 percentage points for the life of the account.

Bradford & Bingley savings accounts are now part of Abbey, owned by Spanish bank Santander, so you have one lot of £50,000 compensation on all money held with Bradford & Bingley, Abbey, Cahoot and Asda.

For this reason we've ruled out Abbey's Instant Access Saver, which is also good value and on sale through its 704 branches.

Post Office Instant Saver pays 4.6% (5.75%) on £500 or more. But be ready to move after 12 months when the rate will drop when the 1 (1.25) percentage point bonus runs out. The rate excluding the bonus is 3.4% (4.25%) and you are limited to six free withdrawals a year.

You can run it through 12,400 post office branches and have an unlimited level of compensation from the Irish Deposit Administration Scheme.

EASY ACCESS INTERNET

Egg Savings Account pays 6.3% (5.04%) on a minimum £1. Unusually, this rate is fixed for 12 months after you open the account. It looks particularly attractive as interest rates are expected to tumble over the coming year. Egg is part of American bank Citibank, and you are covered up to £50,000 under the UK scheme.

Yorkshire Building Society Internet Saver pays 4.56% (5.7%) on a minimum £1. It does not pay the very top rate, but has paid a consistently good rate and been close to the leaders since it was launched three years ago.

The account also comes with a cash card so you can withdraw money from ATMs.

EASY ACCESS PHONE AND POSTAL

Coventry BS Sixty-Plus PostSave pays 5.28% (6.6%) on £500 or more. The rate includes an extra 0.68 (0.85) percentage points for a year. But it will still offer good value as it comes with a guarantee to pay at least base rate plus 0.25 percentage points until March 31, 2010.

It is open only to those aged 60 and over. Look around for a better deal after 12 months when the bonus runs out.

West Bromwich Building Society Stratus pays 5.25% (6.56%) on a minimum £1,000, which you run through the post. It limits you to six withdrawals a year but guarantees to pay at least base rate — currently 5% — before tax until October 1, 2009. Or you can access the account through its 47 branches.

EASY ACCESS TAX FREE CASH ISAS

Kent Reliance Direct 65 Isa pays 6.31% tax-free on a minimum £30,000 for those age 65 or over, or 6.26% on its Direct Isa Under 25 on £1 minimum for those aged between 16 and 25.

Both are new postal accounts from the building society, so you will have to watch the rate carefully.

UK bank safety

Worried about savings compensation? We detail the inherent safety of each UK bank for your peace of mind...

• Abbey safety overview
• Lloyds TSB safety overview
• RBS safety overview
• B&B safety overview
• HSBC safety overview
• Barclays safety overview
• Alliance & Leicester
• Co-operative safety overview
• Citigroup safety overview...
• Full bank strength round-up

Money Mail recommends only accounts that come with a guarantee linking them to base rate or have paid a consistently good rate for at least six months. But Kent Reliance has proved itself to be a decent long-term payer on its other postal Isas open to all.

Principality Building Society E Isa pays 6% on a minimum £1. It is run over the internet and the building society has its own authorisation from the FSA so you have the full £50,000 compensation on your accounts with it.

FIXED-RATE BONDS

AA Savings one-year fixed-rate bond pays 5.77% after tax (7.21 before tax), minimum £500. AA Savings is part of HBOS so you have one lot of £50,000 compensation per person on all your money in Halifax, Bank of Scotland, AA Savings, Birmingham Midshires, Intelligent Finance and Saga.

Anglo Irish 5.64% (7.05%) fixed for one year, minimum £500. Your whole balance is covered by the Irish Deposit Administration Scheme.

FOR A 100PC GUARANTEE ON YOUR MONEY

Anglo Irish Easy Access telephone or postal account pays 5.12% (6.4%) on £500 plus.

National Savings and Investments Direct Isa at 5.3% tax-free (phone and internet), though you can't transfer previous years' cash Isas into this.

Northern Rock Fixed Rate Isa pays 6% for one, three or five years.

Post Office Instant Saver pays 4.6% (5.75%) or its Cash Isa at 6.25% tax-free. But switch after 12 months when the 1.5 beforetax percentage point bonus runs out. The accounts, available over the telephone or post office branches, are run by Bank of Ireland.